welcome back to "squawk on the street." i'm dominic chu. health care standout is the best performing sector in the s&p united health group adding the biggest boost so far and the dow as it approaches that 23,000 mark for that index. the stock is hitting an all-time high on earnings and strong guidance other leaders are aetna, as well that does it for "squawk on the street." let's send it downtown to the new york stock exchange for the start of "squawk alley." guys, back over to you >> thanks for that good morning, it is 8:00 a.m. at netflix headquarters in los gatos, gacalifornia, 11:00 a.m.o wall street. welcome to "squawk alley." ♪ ♪

good tuesday morning welcome to "squawk alley." i'm carl quintanilla with john fortt, mike santoli here at post 9 of the new york stock exchange joining us this morning, paul holland. good to have you back. let's talk some netflix this morning. off the highs today, but the streaming giant hits another record high today, adding 5.3 million subs in q3, promises an $8 billion bet on original content next year. last time you were with us you called the company pure heroin when compared to its competitors. it's worth noting foundation capital is an early investor and you've worked closely with reed hastings now we're in this chapter, paul, we're watching the u.s. profitable and the playbook being expanded international, where that's increasingly where the story is, right? >> that's correct, yeah. if you recall a couple years ago we had this conversation before they had any significant presence in international, and i think really three things are

going on we saw a beat in terms of subscriber base, we saw a rapid expansion internationally, and we saw a continued pressing of the bet on original content, so all three things are playing out well for netflix >> paul, i guess if you believe the long-term netflix story, you believe that this company is possibly the best in the world at matching the right piece of content, you know, making it discoverable to the right user and thus deploying what's going to be this $8 billion in exactly the right way. is that how you see it, is efficiency being the story here longer term? >> i think efficiency's certainly part of it, but every time i've looked at what the netflix management team has done when they choose between short-term expediency and sticking to the long-term strategy, they always go with the latter and when i look at something like original content, my wife and i watched "mind hunter" last night, a brand new show on

netflix, absolutely fantastic. but what's great about it is, is that it's effectively a police drama. it's a very tired genre on traditional tv, but what they've done is create this incredible beauty and artistry with the period pieces from 1977 in virginia, my junior year in high school, my friends at prince george high school, but also just the cars, the airplanes, the art, the music, the fashion, all the things that they did with that, the attention to detail it's like oscar-level movies, but it in our nightly tv stream. >> paul, how do you think netflix these days thinks about where the product is going to sit in the entire array of competition for kind of customer eyeballs obviously, we've gotten past the idea that it's somehow either netflix or a cable package or only one streaming app, but does netflix want to be the first choice indispensable for everybody, or do they feel they have to displace the others in

an active way? >> i think they probably went through an element of their history where they were in the mode of displacement, certainly. they had to come on to the market where traditional tv was 100% of the marketplace, but now as you know what we're seeing is we're going from this notion of cord cutters, so people of my generation or slightly younger, who are getting off of cable as a platform to my children's generation, which are called cord nevers, and so this cord never generation as they are coming up now really all they watch are netflix and other streaming shows. they really don't have any relationship to terrestrial television >> paul, now we're in this picture where we're going through the candidates of other competitors who could feasibly offer services at this scale to threaten netflix, or at least threaten their market share. it was suggested by rbc in the last hour that amazon could do it, right, a stand alone $7 a month service, ex prime, but unlikely because they want to

protect prime, so who does that leave? >> i think that's an excellent question, although i certainly know the netflix management well enough to know they are paranoid and looking around every corner in terms of where people could come from with new content, but i think amazon has been a formidable competitor, but feels to me over the last few quarters netflix has begun to separate there and i think part of that is, of course, they've taken the lead they've really pressed the bet on this original content and they are putting incredible pressure on all of their competitors across the board, so the point we're seeing some of the traditional competitors begin to capitulate, so i think it's going to get down to a handful of people who have either the will or financial resources to continue to compete. and, certainly, amazon i expect to be in this market for a long, long time. >> quickly, paul, i'm wondering what opportunities does this netflix phenomenon create beyond, obviously, the bonanza among content creators in

hollywood? jeffrey katzinburg is trying to raise money to reinvent short form content, but what other things are you looking to fund that netflix has paved the way for? >> well, i think the whole media category is a very tenuous category for folks in the venture capital industry, and you guys are in media, you know about the pitfalls associated with it. obviously, we've been very, very fortunate. we've gotten the best play that there's been in the last 25 years in media with netflix, so we certainly monitor what we see in other places. we see some other subscriber-led services, some interesting companies we've observed, some appeal towards millennials, some appeal towards people with a heavy sports mix, but these subscription-led services with high retention, high engagement, those are places that we see some fertile ground, and i'd also make a comment, i don't think it's something we'd invest in, but i think what netflix is going to help to see is the

demock ra tieization of the content. i think you're going to see content happening all over the world now because it's a focus on quality, less about who you know, it's what you're creating. >> paul, while we're on the topic of netflix, we are watching the dow, which just hit 23,000 for the first time. another big milestone. not too long after we crossed 22,000, this is being helped in this case, paul, by unh, just a monster move in that dow leader today, was adding 70 points to the index earlier this morning, but i got to ask you just about the environment, the slow, slow melt up that we've had very few days with 1% moves even on an intraday basis it's been six weeks since the s&p's had an intraday 1% move. how do you characterize the environment we're in right now >> for investors of the strata that we're in and the venture investing realm, i'd characterize it as slightly

dangerous. we just got together a group that we formed called the foundation capital fellows, graduate students from all across the country from m.i.t. and harvard and stanford, berkley, chicago, and other places, and they were asking that question, you know, from the historical perspective, for me, 34 years out here in the high-tech industry and what we're seeing now is we're going into our tenth year of a bull market, which is close to unprecedented, even in my lifetime the kind of things i've seen, so i think this is one you've got to be very, very careful, at least at the stage of investing where we are, at the level that you guys cover in terms of public market investing. the only mistake you could have made is being out of the market. >> santoli, your thoughts? >> you know, it's the grind. i mean, that's what really stands out is how quiet it is, really how little obvious energy or enthusiasm is behind it it's about the world repricing stocks the dow the clear winner, also, by the way, over the last year it's been the kind of stocks

that work in this environment, global, and the rest of it the other thing that stands out to me, about 23,000, even though it's only 4.5% above 22,000, is if you go back to the year 2000 high, 11,500 was basically the cap. it spent a few days above that level, so you've doubled off the 2000 high, which is interesting, which also is outperforming what the s&p has done since that point. >> mike, if you're mom and pop at home, how do you rebalance in this kind of environment, where if you were just taking the straight ahead advice of mainly being basically in the s&p 500, you're looking at your performance over the past year and up, like, 20%. what do you do you don't want to necessarily get out of the market entirely, but you also want to kind of be cautious >> if you're rebalancing in the true sense of the word, and probably is uncomfortable, you're trimming back on stocks and putting it into bonds or something like that. and i think that's what frustrates people, it doesn't seem like that feels right

>> would you have been up 20% in a year >> you bring it back to what your mix is supposed to be, i guess. but what's most interesting is it's kind of the everything melt up it's not just u.s. stocks. >> absolutely. paul, this morning bank of america has their manager survey, cash levels go to 4.7, which is the lowest since 2015 they argue that a drop to 4.2 is what, in their words, ends the trade. is it a matter of figuring how long the music plays >> well, i think anyone who's been around for more than one cycle looks at this and says at some point the party has to end, but let me make a different comment. over the last few weeks i've spoken at three different investor conferences all focused around china we have a significant investor in our fund and let me just give

you an idea what's going on. what's driving the growth in our industry, where we're being exposed to new investors that, frankly, we've never heard of that are showing up with $7, $8, $9, $10 billion in capital and what we're seeing in the u.s. stock market is, where are the alternatives the world is getting richer. i know there's a dialogue coming out of the white house that, you know, the world is going to gloom and doom, but just the trendline on these other things is the exact opposite. china is getting wealthier, india is getting wealthier, the developing world is getting healthier in fits and starts that money all ends up going into some equivalent of pension funding, savings, wherever it happens to be, all seeking alpha and beta and at the end of the day what you're seeing now driving this and also the growth in our industry and private equity and others is just the world is becoming wealthier and that money is looking for a return somewhere, and at the moment it's finding a terrific home in the u.s. stock market.

>> right with a premium that we deserve, according to some like larry fink dominic chu is watching this action at hq as we settle a point below 23,000 now dom? >> carl, you talk about wealth creators in the world getting richer one of the places that has been a big, at least contributor to that, has been netflix stock you guys have been mentioning earlier, obviously, after hitting the record high we saw earlier in the session, netflix shares up 62% over the last 12 months they have doubled we wanted to look at netflix stock and the history since 2002 it's had a lot of big gains and losses it hasn't been without at least some bumps along the road here, but it has been a stock that's at least doubled five times in its public life. if you go back to calendar 2003, a year it was up nearly 400 points, but the following year it loses half of that value, in 2005 another doubling from those low levels and then fast forward to 2010, more than triples in value only to lose more than

half of its value in the year after that and then up 300% in 2013, up 134 set in calendar 2015 five times in its history as a public company has it doubled in a calendar year. to put in context, only a handful of stocks each year go into this doubling type phase. just since the financial crisis, picked out some of the highlights remember last year nvidia, 224% run there. amazon.com, 118% in 2015 one of the stocks that doubled then southwest airlines 125% in 2014. micron, that 240% gain in 2013 if you go by a couple more years, bank of america 2012 a doubling of that stock, oil and gas doubling in 2011 cummins engine, up 140% during that time. carl, as we talk about the wealth creators out there, netflix has been over the past few years one of the biggest

gainers, not on a consistent basis, so to speak, but on one of the big moves, big bust or boom environment for the last five or six years or so for netflix. back over to you >> dom, thanks for that nice tie-in between the market action we're seeing today and the story that is netflix this morning let's get to bob on the floor and see what he sees bob? >> the important thing, carl, it was just six weeks ago, very first week of august when we were talking about dow 22,000 and what powers forward, so these numbers getting tighter and tighter here in terms of the time differential, i want to show you how broad the market advance has been, and you can see this in the dow leadership, so the thousand points, remember the dow is a price-weighted index, so the higher priced stocks have a bigger influence with that said you can see how diverse it is. i'm talking about now what's contributed the last thousand points to the dow industrials and really there are five companies that have contributed more than 60% of the gain, five of the 30 stocks

boeing is the biggest, kat pillar, goldman sachs, and 3m. chevron is another 100 points and you've got seven, six companies that are almost 700 points of the 1,000 points we've seen advancing there have been negative contributors in the last six weeks or so. we've talked about general electric, for example, disney has been a negative contributor and nike, which was a big mover early in the year has been a negative contributor in the last three months the bottom line is this rotation we keep talking about, so if you look at the big gainers, yes, you can see the industrial names, boeing and caterpillar and 3m amongst the leaders pushing the dow forward, but also financial names, so goldman sachs has been a big leader, as well home depot on top of that, now oil names, some of them have been big contributors like chevron. the point being it's not one sector that's moving and that's the reason we keep hitting consecutive new highs.

mike, back to you. >> bob, thanks very much joining us now, peter costa. dow 23,000, it's october 17th, which means the market has kind of made its way through august, september, first half of october, which we're supposed to be where the bears had an opportunity. do you think that clients, investors, procrastinators are saying they had their chance through the end of the year is clear or we still have that kind of hesitation about this >> i don't think there's any more hesitation. i think that what you're seeing is we'll start seeing more flows into etfs that a lot of retail investors are getting into you can tell by the movement from the last thousand points, top seven big names are the ones that are moving the most, and that generally pretends or, what's the word, generally shows that's retail investors, because they always look for the big names to jump into, because they

are usually solid earnings, you know, providers, they continue to grow well, boeing is doing fantastic. you know, to me it's just like retail money is starting to flow more and more and more into this market, and i'd like to say that's usually a sign of a top, but i could have said that five months ago, i thought it was retail money, as well. so we're continuing to see this inflow and a lot has to do with etfs >> do you think we're breaking the backs of the doubters, of the bears? >> pete costa was one of the biggest doubters and i threw in the towel last friday. >> what did you do >> i was bearish until the beginning of august and i realized this is a market that it's not only because of supposed track -- trump tax cuts, there's a bigger story going on here. and the bigger story, i firmly believe, is retail money and institutional money is flowing into these are not discretionary stocks that they are going into, meaning pricewise, meaning they are going into an etf where big

cap etf, s&p etf that costs $37. that etf doesn't care what the price of proctor and gamble is it's investing in those stocks and that's what you're seeing across the board money is flowing in, not price denominated. it's quantity. i think you're going to continue to see that. there's no reason for them not to be. >> peter, how does that fall apart, though? how do you guard against the downside of this rush into etfs? >> what you're seeing is, even when there is any kind of selloff, there's the underlying buying pressure. there's underlying bids below every stock everywhere across the board. generally that means there are guys looking for that type of thing. so there's still that money trying to flow into the market >> does that mean people will also sell indiscriminately if they are buying indiscriminantly in this market >> you would like to think so,

john, but we haven't seen it yet. if you look at the way money has been flowing into the etfs, we have not seen a pull back since this has been going on haven't seen a major pull back where you could see you're in a corrective phase you haven't seen it and there have been reasons why there should have been a little bit of a correction, but we haven't seen it. >> what's the stat on 3% draw downs? >> well, 5% draw downs is if we go into early december, largest stretch ever >> right >> basically 40 trading days away from the longest period ever >> you're in 40 days from being probably the best bull market we've ever seen. i mean -- >> true the ability of it in terms of how long it's lasted. not been going at a steep angle. >> no, but we started the year on a steep angle if you look from november to probably february, it was on a -- it was nonsustainable angle. right now you're on a sustainable angle. i'm not, you know, i was bearish because i felt price valuations

were out of whack, but in reality that's not what people are investing in they are investing in the long term, they are investing in trump tax cuts, you know, any number of different things and nothing on the horizon that's scaring anybody. the only thing i could think that would be out there -- >> north korea >> would be north korea. the biggest geopolitical risk we've seen >> one that's lingered with us for 40, 50 years >> seems like forever. and that's the only thing to me right now i can see on the horizon, but again we looked at the financial crisis, people were looking past that, as well. >> the reason these things have been allowed to go along this mechanical market is because the entire world is growing. every developed economy is in expansion mode, it's very rare for that to happen so the question is, were those conditions just there in place that are, you know, going to expire at some point that's what we don't know. >> you would think so. you would think every expanding market has its run, you know, could be emerging markets or

u.s. market, china they all have their run. do i see that in the near future no i think that's what people are investing in looking at this window and that window you don't see a lot in there that says get out. maybe at some point you may start to see that. then we have to see how everybody reacts and how the etfs react i got to tell you, i don't know. it's a completely new world as far as that kind of investing is going. >> 22,997. maybe this is the day. >> you had your chance thanks, peter. we're going to take a quick break here obviously, 23,000 is the story of the morning, but there's a lot more to get to as we keep our eye on unh, goldman, morgan stanley. back in a moment [vo] when it comes to investing,

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paying close attention to dow 23,000, which became a reality a few moments ago, although we're now about ten points shy biggest contributors since 22,000 back in early august, boeing, then cat, home depot, then goldman and 3m. just your top five gainers >> no thanks to apple. microsoft, meanwhile, making a bet on the future of virtual reality. the first batch of vr headsets called windows mixed reality are out today, from partners including hp, dow, lenovo, and

acer the creators update will work with these headsets and joining us now, microsoft corporate vice president of its windows and devices group, always great to have you welcome. >> hey, john, great to talk to you. sorry i'm not in new york with you to show you these great devices. >> they start at $299 for the entry one that doesn't have the controllers. you're calling it mixed reality, but these are really vr headsets at this point. you're teasing us, right, about the coming holo lens >> yeah, spans the gamut from full-on computing where we have the world's only untethered computer, down to this immersive virtual reality that you mentioned and these are incredible new headsets because they are a new price point, easy to use, and you can get the most immersive mixed reality experience on a mainstream pc.

>> so which factor do you think is going to drive this to be a bigger success than vr last holiday season oculus was out, htc out with the vibe, which was more complicated, and people didn't buy them in big volumes. seemed the playstation vr fared the best of them all what's going to make thi different? >> great question, three things will move the industry forward the first is price we're really dropping to a whole new price level now, where you're at $299, $399 entry point. that's a dramatic price delta. second is ease of use. with some of the other sets from a year ago you had to put separate beacons in your house now you don't have to do that. you get this incredible experience with more richness, and third is the kind of continuation of great new content. we're announcing today kind of a

halo themed experience that gives you a taste of the halo world in this immersive virtual reality. those three things, i think, are going to unlock the next chapter of mixed reality >> you have halo, you got mindcraft. which one of those to use another metaphor, which one of those is your mario, right, your kind of hero title that's going to drive people's association with this platform >> well, i think they both have incredible loyal fan bases for sure, so it's hard to pick between your two favorite children, but certainly mindcraft and the ability to create in 3d, which is another thing we're bringing into the windows 10 update, that is going to unlock a lot of magic in fact, we came out with a new release that gives you 4k experience of mindcraft, and halo has the loyal fan base. both will be pretty incredible, but i also think it's this new platform we have with windows 10 where you get mixed reality, you get -- we're going to mainstream 3d now and the ability to do all

of that, not just on the headsets, but any computer that runs windows 10. if you have a front-facing camera, you can hold it up and see digital capabilities on your real world that's going to really bring ease of use to tease people into this great new world >> how much marketing spend should we expect from microsoft in the next year to push this mixed reality vision and how will you be working with your partners to do that? as we've seen with smartphones, takes millions upon millions of dollars to drive consumer awareness. >> i think a thing that's really exciting about what we've got here, we have an ecosystem behind this mixed reality effort that's also a change from last year, so with the five partners you've got hp, dell, lenovo, samsung setting another premium bar with their device, you're going to see some incredible investment across the category for us it is going to be -- >> how much? >> well, i don't have a specific number to share with you and it's hard to gauge it. you'll see a lot of television advertising this holiday,

starting in a few weeks. it will be very noticeable in the u.s., uk, australia, then when you look at the investment in gaming, windows, hardware, it will be a significant effort i think it will be one of the growth factors for the pc. >> all right, we will look for it vp of windows and devices at microsoft talking windows mixed reality, the new vr headsets out today. >> thanks very much. as we head to break, another look at dow 23,000 we're just below that level right now. we got as high as 23,200 in this hour it's health care earnings helping along the way, united health and j and j with 5% and 2% rises respectively. s&p 500 also has poked into the green. "squawk alley" be right back

good morning once again, everybody, i'm sue herera. here's your cnbc news update at this hour.

president trump's drug czar nominee was a controversial choice because he sponsored a bill that made it harder for the dea to crack down on opioid distribution meantime, separately, two chinese nationals have been indicted for manufacturing opioids and selling them online to americans california will continue to sanction wells fargo for a second year saying the san francisco bank has failed to complete reforms that the state required in the wake of disclosures about bad practices. protesters and police clashed in ukraine amid a demonstration calling for poern sheng kuo to step down. opposition parties want anticorruption reforms in that country and an overhaul of ukraine's elections. and royal watchers, mark your calendar for april prince william and princess kate have confirmed that's when their

third child is due news of the pregnancy broke last month, but the duchess of cambridge's due date was a secret the baby will be fifth in line to the british throne. you're up to date, that's the news update this hour. carl, back to you. betting is on as to whether it's a boy or a girl. >> thank you, sue. let's get over to dominic chu back at hq with the european close. >> european stocks are moving higher remaining near four-month highs helped in part by upbeat earnings related news. pearson up sharply in london trading the uk-based educational publisher raising full-year guidance saying pressure is weighing on its north american business pearson has been hit by the shift from paper textbooks to digital, resulting in thousands of job cuts. that stock is down 18%, though, so far this year france's debt now hitting a record high earlier in the session. the maker of danone yogurt with

underlying third quarter sales helped by demand for infant milk formula and water, as well, in china. a different story, though, for merlin this is the owner of legoland. it tumbled after issuing a profit warning saying recent terror attacks in the uk hurt business during the summer months and stock markets in spain are continuing to try and rebound in the face of political turmoil. the country's top court has officially now ruled that catalonia's independence referendum is illegal. they are citing a regional law the court says was against the institution. prime minister rajoy has given catalonia's president until thursday to back away from secession or face measures to reduce that area's autonomy. we're going to finish with the uk pound moving lower, despite consumer inflation rising to a five-year high of 3% in september. testimony earlier today by bank of england governor mark carney and fellow policy makers has been viewed by cautious, raising

doubt as to whether or not we see a november rate hike for them in their cards, as well back over to you, mike >> dom, thank you very much. well, it's not just the dow on a record run right now. the nasdaq trying for its fifth positive session in six, also coming off its 58th record close of the year. a lot of talk about the public and private markets. from the "new york times," andrew ross sorkin this morning, how valuable is a unicorn? maybe not as much as it claims to be. for more we're joined by l2 founder and author of "the force" scott galloway at post 9. great to see you >> thanks for having me. >> i wonder as we look at the dow hitting the records, the four companies that you write about, amazon, apple, facebook, google together worth more than $2.5 trillion and these private companies trying to stretch the definition of what their private valuations are, what's the message to take out of that in terms of psychology? is the market saying those four and companies like them, it's game over for their sectors,

their segments, and don't even bother, and what's it mean for the private companies trying to jostle for attention >> so there's a reason why there's only a third as many publicly traded companies as there used to be and it's better to be a private company, because this valuation number is hard to even call it a number. it really is an illusionist trick. >> for the private company >> because i'll invest in any start-up at a billion valuation as long as i get to control the terms and that's what financiers get to do. a lot of companies see it as a fantastic press release to announce they are a unicorn, so instead of a $7 million valuation, i'll give you a 3x liquidity preference and why go public and be subject to the scrutiny of the incredibly robust machine called the public markets? stay private, you can get liquidity, make acquisitions, so it's a friendlier environment to put out this big number. uber is not worth $70 billion,

but it is according to recent press releases >> what do we think it is worth? >> i think uber is probably -- if you look at the -- this is pure speculation, but if you look at uber $70 billion and based on cultural problems, you could argue it's lost more money than a quarter of the s&p in terms of declines. i believe it's decreased $20 to $30 billion because of the nonsense that's taken place at the board. i don't see how a company doing $7 billion in revenues and losing money is worth more than airbus that's pure speculation, markets might disagree, but the bottom line is if it went from 70 to 50, a decline of $20 billion is a massive disruption in shareholder value, but doesn't matter because it can say the softbank invested 75, we'll give you all sorts of goodies wrapped up behind and we're fine, all good >> scott, before the financial crisis we had liars loans in part fuelling home valuations,

right, went through the roof we know how that ended up. if we have liars investment terms now, what's the end game >> so, the shock absorber for all of this is the good thing here is that the people that get hurt, if it, in fact, ends up like some sort of crisis and we find there's no chairs when the music stops, institutional, thoughtful investors who can afford mostly at least on a front end these institutions, but the real shock absorber for a decline in valuation is the common shareholder, specifically the employees. because if you're a company with a $10 billion valuation and you get sold at $8, the guys with the black hats get all their money back, all their preps, it's the common shareholders, the employees, that are the shock absorbers here the unusual dynamic in the private marketplace, everyone's trying to follow amazon and they are pursuing growth and vision and leadership at the expense of profits, so the general private

market is, profits be damned, grow, grow, grow and you got to ask, does this end well >> when you have any market that has what you're saying is excessive valuations or stated valuations, the worry is overinvestment in certain things, really irrational new businesses, things like that are we actually seeing that or is it on paper we're saying this stuff is inflated? >> i think the algorithm for creating shareholder value in the private markets is find a great market, technology at the heart, and establish your position as the perceived leader, the tier 1 vc, the bigger number valuation, regardless of the terms. >> whatever segment you're talking about. >> it's becoming a winner take all economy. if you look at the valuations, the number one player has more than a valuation than five or ten combined when i was starting companies in the '90s, three or four companies were doing okay. now it really is winner take all. >> so you do have that game over

effect, i guess, all right scott galloway, thanks very much. as we go to break, a lot more to come on dow 23,000, which we hit a few moments ago rick santelli, what else is coming up? >> you know, we're looking at the push and pull of the marketplace. you have activity by central banks pushing, you have other markets pulling. might create trading opportunities. we'll talk about them after e eak.th she's nationally recognized

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half-time report at the top of the hour with the dow breaking through 23,000 for the first time, we are joined by one of the best value investors of the last decade. bill nibron is with us live. you won't believe the two stocks he is buying and wait until you see what options traders are saying about health care stocks also, first in controversy, we're live in new york city as nfl owners meet with their business in the president's cross hairs. "halftime report" at noon eastern. carl, see you in a bit >> scott, thank you for that dow crossed 23,000 earlier this hour. let's bring in director of floor operations for ubrs, who joins us at post 9 with his hat. did you have that ready? >> yes i'm going to start getting hats with interchangeable numbers, because it's tough keeping up, but, yeah, this is different we have the dow 22,000 hat in the booth. >> 1,000 points in 76 days >> right >> driven by a handful of large

names. what does all this tell us today? >> well, it tells us that there's still a lot of loose money out there, and it continues to come in even though i'm wearing this celebratory hat, i would say i was a little nervous yesterday, because there were signs of noncommitment and some neutrality advances in declines were exactly even, you know, and with the market that was rallying, wouldn't like to see that. secondarily, volume here on the new york stock exchange dipped under 700. again, a sign of noncommitment, so it may mean that over the next week or two the bulls are going to need some kind of news prog to keep the rally into second gear, so you got the touch 23,000, let's hope it's not a touch and repel and go from there >> like a netflix kind of news prod from more big-name stocks reporting earnings, is that what

you'd be looking for >> i might see something on a political, geopolitical, or maybe see some actual progress in washington. the other thing i'm going to look for, john, is how stocks react to earnings. it's been kind of a mixed reaction so far. now, one of the justifications that we're up at all-time highs and people say, well, et cetera, et cetera, but the earnings are still good well, earnings are still good, but you're not getting response from the individual stocks that probably or hopefully will change over the next week or so, but in seeing that, i'm not too thrilled about it. >> i imagine, you know, back a while when these thousand-point increments weren't as coming as quickly, you know, you'd have some general excitement out there, people kind of oh and ah at this new landmark number and the people in the business would say it's just a number, so right now you don't really see people

you run into out there saying can you believe the dow's at 22,000 or 23,000 right now >> i did hear somebody the other day talking about bitcoin. >> bitcoin 6,000 is the new dow 20,000 >> i think you're right, but i'm not going to get any bitcoin hats, all right? >> it's a virtual hat. >> this happened on a day, art, where the spread goes to 70-some-odd basis points >> right >> likely to flatten out more if december looks like a sure thing. >> yeah, it's interesting. i think december is a sure thing, but again, i'm a doubter when we get into the next year now, we had a little bump in rates because the rumors in washington were that taylor and trump seemed to really hit it off, but i got to believe that some people around trump, if he's listening to anybody, say look, until you get this economy really kicked in, you need rates to stay as low as they are right now. and taylor may be good at what he does, but his formula says

that we should be 2 1/2 points higher in rates. my bet would go with powell, who may have mnuchin in his corner they have worked on some of the deregulation problems and i think mnuchin is a bit of a fan. >> we haven't had a 1% intraday move on the s&p in about six weeks. they are becoming more and more scarce do you think we'll get back to a time where we see a couple hundred points on the dow in a day? >> yes, i do think you will. i think this is partially a sign of robotic investment, if you would. the money's flowing in, and the people are drifting more and more away from active management, into a passive management, etf kind of thing, and that is potentially dangerous, because what happens is, you know, the efficient market theory says there are so many people looking at so many

companies and all of their earnings and how many cardboard boxes are in the shipping containers and exactly what's there. that's not happening anymore stocks are moving up because they are in an etf, they are in an index, and that means they are being inefficiently priced and when that comes home to roost, you'll get better than a 1% move. >> if that's what's happening mechanically, what's interesting to me, you look at the studies of prior periods with extremely low volatility, small average daily moves, one is the early '90s, but the other is 964, if you see those years where it seems the entire market was in slow motion, anything feel similar to that from back then >> see, you picked on a guy who was here those years >> i'm taking the opportunity, yes. >> it does have a mildly similar, but again, i think these days it is slightly different. then it was lack of a full theme in getting into things, and i

think this is much more of the fact of the robotics and the passive investment >> art, thank you. >> my pleasure >> art cashin. >> great insight, as always. when we come back, still watching dow dow "volatile markets." something we all think about as we head into retirement. "squa "squawk alley back in a moment ct what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife.

let's check in with rick

santelli and get the exchange. >> any time you can say 23,000 and cash i can remember in the '80s boy, we've come a long way something happened in july that i find important the high yield close for the year for bunds was the 13th of july so we're going to start charts in july with bunds overlay with ten-year note yields there's something interesting to that chart in my opinion notice the way bunds are starting to tail off and notice the way ten-year note yields are not that's going to prove to be very important here now, let's go to the whiteboard. we've heard a lot about yield curves today i love hearing a lot about yield curves tens minus twos, basically the flattest since august of 2016. that's when i started hovering in the mid 7 0z. what is the driving force here because there's a spread relationship which means you have twos and tens the curve can flatten with a

number of combinations, but the biggest curve causing this to flatten isn't the long end, it's the short end. same true for 30s minus 5s this looks different because this is a monthly chart. this goes back to the flattest since around thanksgiving of '07. we'll call that ten years. currently trading just under 85. that's pretty flat and it tells us a couple of things it tells us that there's now a movement on the curve where you have twos, threes and fives all very aggressive, mostly attuned to the fed, but there's other things but that's sort of the driving force. and do keep in mind the three maturities that have higher yields and lower prices than we settle at the end of last year now, here's where it gets interesting. so these charts have the short maturities, moving higher, faster the spread between ten-year and bunds right now's the widest it's been since june of this year not that long. but here's the important part. this chart is showing the ten-year outrunning the bunds.

this chart shows short end outrunning tens. it creates a lot of distortions and hence opportunities. one would ask why did the chart you were looking at on your tv screen dip down on the bunds and it wasn't met with a dip down by tens partially because what's driving the short end in terms of the fed, maybe balance sheet issues, maybe the fact that our economy is doing a bit better and may have better policies potentially to make it cooking grease even hotter but the point of this is that the market is telling us that mario draghi is not going to be aggressive in his removal of stimulus and indeed that's going to create a tug of war between our forces on the curve and the relative value distortions on the long end based on euro so think it may present opportunities especially with these curves continuing to move, carl, back to you. >> all right thanks for that guidance today, rick ckri santelli. "squawk alley" will continue in just a moment.

it took just 76 days to get from dow 22k to dow 23k. and if you look at the weightings and contributors, companies that added the most to the dow's number, boeing is

first adding 142 of those thousand points followed by cat them home depot. higher priced names. >> higher priced stocks on a roll like boeing i think if you were looking at that list trying to get a theme out of it, it's probably somewhat encouraging from the economic view. more cyclical companies about the global industrial rebound plus home depot with housing and retail it's better, i guess, from that perspective than saying it's verizon, j&j and coke which would be more defensive index. >> coke added five, verizon was flat. >> yeah. not technology this time being among the leaders. mentioned that apple was -- >> apple had a draw into august -- or into july. >> yeah, but not since august 2nd not so much. >> names that actually made it tougher to get here that otherwise subtracted points from the dow, disney took away 72 points, nike, ge, utx and merck a touch.

>> disney and nike, a lot of those kids portfolios that people set aside when the baby's born >> lump those in with apple, all associated bob iger on the apple board. >> ibm tonight i assume you'll have your eye on that, right, jon? >> of course >> let's get over to the judge at hq. and welcome to "halftime report," i'm scott wapner. our top trade this hour, finding value in a record breaking market with the dow crossing 23,000 for the first time ever earlier today, which stocks can still deliver for your money with us for the hour to discuss and debate that, jim leeben that will, john and pete najarian we begin with one of the best past performing of the decades, bill martin beaten 99% of his peers over that period, he is with us today with two eye