the first half of 2017 are down 15% relative to the first half of the 2016. but yet authorizations are up 18%. you have all of the ccar dividends and buybacks, i expect november to be a strong buyback month. >> it's been a pleasure. >> you've been to fars are y paris -- going back to the farm. >> still going to do halftime report >> love being here. >> "squawk on the street" is next ♪ >> good friday morning, welcome to "qua"squawk on the street. the nasdaq will be a big star after a big night for big tech amazon, google and microsoft

beat europe is solid and back home watch bonds, the strongest back to back gains since 2015 the big day for big tech rollout earnings from amazon and alphabet and microsoft and intel. >> all of those set to move higher at the open as well we've got the amazon effect -- well, maybe, maybe being blown a little out of proportion what is true is cbs vs is tryint buy aetna, in a deal worth $66 million. >> the retail wreck, macy's kohl's moving lower also it is a strong morning for big tech all jumping on better than expected results, guys last night in the first hour of all of those results, the combined market cap of the three, microsoft, amazon and google, up $80 billion in an hour >> i'm calling it terrific thursday i mean, there were four pearls last night >> i know them.

>> in reference to pearl jam. >> got it, even flow. >> very well done. >> i have to tell you i'm trying to rank them and i can't, they were that special. because i can tell you microsoft, azure number was great. i could go easily into amazon and talk about how they created a holiday that may be the second biggest holiday in our country when it comes to spending and youtube up 70%, making a fortune at youtube intel has figured out internet of things and brian is making intel part of the equation these are unbelievable >> if you had to choose, wouldn't you say the move in microsoft is striking? >> it's very funny you say i was working with my team, i said it's microsoft that was really -- >> as you said, azure up 90 versus 97 in the prior quarter modest pc tailwind and some are

calling azure this trojan horse. >> 3 65, 100 million users. i met with sacha and i was wearing a suit he said they could do 18 billion in azure by this point and i laughed. i recoiled -- that's a great -- you photoshopped that. adobe is going higher. he did 20. they were like at half that a couple of years ago, this is a mazing to be able to do this it's like building five aircraft carriers in like in 16 months. >> it is amazing. >> i'm going to go with alpha get. >> are you >> 24% year over year revenue growth 24%? 24%. >> this company didn't just show up yesterday. >> and watch it, how much do they have in the bank? >> $100 billion in the bank. $100 billion

>> not given to hyperbole, she started by saying we have a terrific quarter, she doesn't speak like that. she's the cfo i idolize -- >> i mean, the quarter was one of the best they've had in a very long time. >> and 15 quarters of double digits top line. >> by the way, in terms of being skeptical, i was skeptical about google web services and that's wrong. >> that's been -- it has been accelerating and diane green has said that within five years now it's like four and a half. she said it six months ago would eclipse amazon seems hard to imagine. >> i think walmart is spending a lot of customers there and they are taking huge -- this -- the word changed and amazon was in first and still in

first. but everyone else figured out, unless you have a cloud strategy, vm ware for amazon, if you don't have a cloud strategy, you're dead. >> what are you going to say to folks this morning that look at traffic acquisition costs up 54 at google. amazon -- granted q3 is usually a big cost quarter but up 35. >> i would come back and say now we're starting to realize cost of doing business at one point ruth porat said this is the way it's gg to be. i lost a lot of wait can't stabbnd to look at myself >> camera six? >> yes, the cost of business is going up but the gross margins is very amazing. alphabet 76,000 people -- >> amazon has 540,000 -- >> the army has 1.2 million. >> head count up 77.

a lot is whole foods. >> whole foods, they do a spartan call but they came out mentioning john clearly staying with them. you have to read the tea leaves and you know an an amazon call it's like a stalinist call john macky is still in the call. the costs are going up but the cell phone transferred into being very lucrative for alphabet that's another thing that happened cell phone lucrative also, one hour a day, they are spending on the site now, i think mill legal yans because i despice them, i think mel lennials have a 29-hour day of which seven hours is looking at this, this is smem. you see them on the subway with the candy crash? what is that how about reading ulysses. >> your subway line has more readers than mine. i do studies --

>> on f train? you can read war and piece befo peace -- >> law and order svu while they multitask and i've seen this. >> you don't need a great education to see amazon is the best performer of all of these names. that deserved? should it be up 9%. >> yes, because it had acceleration how about the four times they dropped india in the call. >> a retail sales accelerating at this point is incredible. u.s. up 28, international up 29. as you said, creating their prime day is -- it is the new holiday. >> they've created a secular holiday called prime day. >> i know. >> lincoln is probably saying how did they come up with that it's a holiday prime day is now -- it's a temple to spending

it's festivus -- >> for rest of us it is. the margins aren't quite what alphabet's are. >> off a little bit. >> let's go j. krrkc. penney, i pretty depressing -- >> let's do the retail -- >> since jim brings it up, they cut the four-year guide 2 to 8, q loss of 40 to 45 estimate was about 18 cents. they are clearing out a lot of stagnant inventory in women's and trying to reset women's and that's having an effect on macy's kohl's and mat tel. >> kohl's gets mentioned positively but won't matter today. mattel was a disaster. >> hard to watch jc penny. it is hard to walk. >> bigll ackman was in once.

>> he was. >> you're talking about clear out the inventory, half of the store. j. krerks p j.c penny, you realize everything they have, the less you want to buy the name brand i bought a hat a couple of months ago, really good. >> is macy's deserving of a 6% decline? >> think macy's is morrell vae relevant but i'm not worried they are paying down debt -- >> they are and more than 7% yield now and by the way there's a j.c. penney piece of preferred that could be at risk here but i do think in the end when you're listening to the amazon call, you get the sense they are like the mighty eighth air force, the fabulous air force we had in world war ii.

they can lay to waste anything that's how great -- the mighty eighth. >> we're going to talk about cv and aetna, figuring into the conversation as well amazon is having impact, not clear it is quite as forceful as people believe behind that deep potential deal but still, having impact in so many areas. >> they have already wiped out the front of the store now they want the back of the store. they are coming for wahlgreens and cvs had to do this. >> we'll talk more about it. only 15% of their profitability comes from retail. they are already refashioning themselves as a health care company. i'm not sure that narrative is quite as potent as people want to believe it is. >> mattel doesn't blame amazon as they blame toys r. us, the q4 had been cut, margins down 7, american girl down 30. >> american girl, geez, overall results were significantly blow

out -- international stable led by asia. the key retail partners moving towards tighter working capital management they cited too. what is that >> i don't know, all i know, it's all about fang again, right? this has just got to be taking everybody back into those names. >> it's uber fang. facebook is up three people realize -- look, i think -- >> it's all about scale. >> the world changed in the way people lead their lives. i had an scm electric typewriter it's actually analog. >> you still don't own it -- >> no i have an olympia parachute but we don't do things the way they do. and i shop now and first thing -- when i need something, i have a big game this weekend against the cardinals, i -- like

i'm -- against the niners. >> it's a trap game so to speak. and i said i need -- someone took my binbinoculars, i get the best pair of zis, which is half of what i thought and they are there the next day who can compete with that? j.c. penney? >> no, and the zeis are fabulous, you can see the pi pimples on the face of carson wentz, he's like 20. >> it's a big reason jeff bezos will be $6 billion richer on paper and likely to surpass bill gates -- >> really today? >> we'll if it holds still to come, a lot of buzz surrounding the deal in health kash, cvs in talks to acquire aetna and big earnings miss and we'll talk to the ceo. haven't gotten to q3 gdp, 3%,

ahead of the 2.6 estimate. we're back in just a moment.

>> aetna is continuing to move higher, that is the stock after

surging yesterday in after hours trading. cvs is in talks to acquire the health insurer the price tag could be for more than $66 billion, well over $200 a share. guys, unfortunately haven't been able to advance thestory in terms of the back and forth between the two companies, the journal reported they are at least having conversations of some kind or another that date back as far as six months. but cvs has been in the process of transforming itself into a health care company in many ways that's been going on for years, remember the caremark deal, omnicare deal. only 16% of the profitability derives from selling things off the shelves in its stores other than of course in the back of the store at the pharmacy. a third of their stores already have these clinics and so the idea of by the way bringing pbm, a pharmacy benefits manager, caremark and insurer together, that's already been done

unh has one of the biggest pbms. >> this is a defense against unh. >> becoming a health care company which is what cvs has been in the process of doing is not something that is a surprise to people who have been following the strategyl larry merlot. >> he said he would not sell cigarettes because no health care company would buy cigarettes you bought dollar general and dollar tree because they sold cigarettes, he was telling you, listen, you can't do both things >> right. >> he's a vision as ry. >> if we're going to be a health care company trying to get closer to the customer, we can't sell things that might kill them. >> right justice would have no problem -- >> it's hard to imagine -- i shouldn't say that it would certainly not appoinpoe

same kind of problem that aetna humana or cigna did, both getting turned down by the antitrust authority. it was june of '15 that aetna and humana announced their deal and it was february of this year that it was finally done we've been waiting would there be a consolidation again. >> you're the consumer you go to cvs, will your -- where will you get the benefit of price or do they get the benefit of price and you still pay the same price because you're basically paying a co-pay. the excess capital, margin goes to cvs which would mean you should be buying cvs on this deal if they can get it done. >> conceivably out in the west coast you're already sort of have hospitals all gotten together to become your health care provider completely and your insurer. but you can argue cvs will be

that, provide your scripts and have the customer and health insurance and they have your pbm. >> i'm going to go right back -- >> it's not clearly in my mind related to amazon. amazon is trying to get -- ooh -- >> you have these reports out of st. louis that they have wholesale licenses in the works in 12 states jeffries today, note out of meg terrell, in our view the entire supply chain is a structural short until amazon has proven to be an aneemic player do you tie this directly >> no, i already use amazon for some health supplements, they are so easy to use i just want -- i long for the day when your doctor goes on your amazon prime, types in the prescription and it comes the next day and i don't have to go pick it up at walgreen's, let me order this lir ka.

i take the lyrica, it's good for you. when amazon does same day, i mean, can you imagine? what does rite-aid do. >> rite-aid has their share of issues, they are selling stores to walgreens that got turned down by the antitrust and made clear that we can't get larger in pharmacy and retail, we have to look to other areas i should mention cnbc.com confirmed as well the talks. when we know they are going on, i don't have a lot to add. >> by the way, jim, wouldn't have to leave the drugs outside. >> that's right. >> i'll give them the key. so happy -- i trust them more than i trust me. they'll leave it exactly where i'll want it i'll forget it i want them to deliver the lyrica that day. otherwise i have to go to the drug store and show -- >> deliver by drone.

>> not heavy at all. bring the man his lyrica immediately. >> it's a fabulous drug, i asked pfizer about it, it's about to draw a patent. pfizer, they are like business people, i don't feel they are as research oriented. >> how about merck. >> and gilead, our force shield is done. >> i'm giving her all she's got, captain. >> zulu, i need you.

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♪ ♪ i like the way you move >> all right, friday we've got a mad dash we're going to talk a little oil, which i'm glad you're getting to the oil stocks, we should talk about wti versus brent and let's get to natural gas if we can. >> look, the integrated nature of a company like chevron or company like exxon is really showing the strength these are companies -- look at this this is the peak, right? and look, look how they've held up and they've held up because they are upstream, downstream. rex tillerson created -- i don't want to say psychiatcreated, waa fabulous stew ard for exxon. these are companies right then, the capital structure in the integrated nature of them makes it so that they are going to reign supreme. chevron got a little more growth

than exxon but they have 50-year plans. >> right. >> and that's -- by the way, tillerson apparently was trying to do that at state department, too long a thought at state. >> he has about a one year plan. not sure if 50 is going to work. >> no, i will say i salute the two companies for coming through this thing on the other side. >> let's talk quickly about wti versus brent spread is larger than it's been in some time you have natural gas and i want to look here natural gas testing its lows, right? >> that's why chesapeake -- you know what, we had -- i had american electric power on last nature and that's a fantastic company. and nick was saying the weather pattern, it's way too warm and way too warm for them to make -- meaning they are not burning natural gas. we have so much natural gas, kuwait doesn't have as much and qatar doesn't have as much we are going to have to export every bit and don't have the pipe to do it and liquid fied gas to do it

we're going to go to freeport and louisiana and see these ships. we need 100 of them to get rid of the stuff. >> let's do that. >> chesapeake is a little j.c. penney right here. >> that's a rough thing to say. >> we're not going to have a rough open, at least with technology opens, it's only a few minutes away stay with us here on "squawk on the street."

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so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife. on the street. the opening bell in just under a minute we talked about big tech, google, amazon, microsoft earnings and retail blowups in jcp and mattel, as for gdp, not much market reaction but a comment on how resilient our economy remains. >> a lot of these companies are so well run and lean, all week we've heard from industrials that have put up numbers that are deeply affected by the fact

that the dollar is weak. and the dollar weak story is -- we want to keep track of the dollar, don't want that to go back up because you'll get core comparisons. i find the enthusiasm for the companies is justified because the revenue growth is there. for years we saw bottom line good now a revenue is good, sales line drug companies disappointing. why? because they don't have the revenue growth that you're getting from the industrials or from the techs >> revenue -- >> don't have it. >> revenue growth at the big three, 12, 24 and 34. >> you heard me say you have all of these guys talking about j.c. penney and talking about mattel, the revenue growth is so extraordinary that i find that -- it was worth waiting for. you had to stay in

there are situations like in expedia it's quite shocking and i thought that would do better. >> we'll talk to the ceo later at the big board this morning, it is nexit resources te s celebrating its ipo and enterprise security software provider at the nasdaq it's in second place today as we hit 1055. >> they are so cool and calm -- the conference call is a bear bones call they spend more time talking about brand-new products in the release and i want every one of them it's rather amazing, they have alexa, she can talk to other devices. they've done so much with voice. this by the way, one of the things that we haven't talked about, the subtle nature of voice being important in these calls. google talking about voice, voice activated.

what powers voice? >> what powers voice >> what powers voice for all of these companies? >> chips, nvidia chips. >> i've got it. >> you're good. >> sometimes. >> they don't call you watson for nothing. >> they don't. >> ibm not a part of any of these conversations. cisco a little bit. >> it is worth going over the sheer level of outperformance financially from google, from alphabet and amazon and microsoft. amazon, this was -- they had 29% -- the revenue growth, organic revenue growth accelerated to 29% at the top -- >> accelerate -- do you know how hard that is to accelerate. >> accelerated and a lot of people think the increased investments are starting to show a payoff and margins are going to start to improve from here meaningful magnitude of margin improvement expansion as it

grows into these investments google had the biggest beat in ten years? >> yeah. >> ten years over earnings estimates. >> they are making so much money data center and search david, youtube is better than the networks combined in the world. bigger than all of them. there was a line took me back to amazon i need your help on brian says at one point, other revenue grew 58%, that includes advertising services and other things such as credit card agreements, 58%. this is a small cap company mass quer raiding -- >> that's off a small number, a small base. >> still, a giant revenue 18 months from now. >> it could be. >> it's incredible they have these drivers that they -- we didn't even know about. the alphabet conference call, like, there's a moment there where they throw out about waymo

and cars in michigan, it's not -- all of these things are losing money can you imagine what they flip >> i know. youtube up 32% maybe, estimating you've got to back into it. >> the channel, sport tv, harking back to comcast, sure, these most hated millennials, they have smart tvs and they watch -- you can do search -- this is a -- what are you laughing at? they can -- the eco system, you search i want to watch funny dog movies funny dog home videos and go to the funny dog home video channel. my wife watches three dog videos before we go to sleep every night. she's in italy, i'll say this, they bore me, i can't stand them just get through the damned dog videos, she's on these channels. it's a dog goes and picks up a

newspaper. oh, wow! people watch it. >> for instance just now, the catalon, regional parliament votes for independence what shot does that have to knock the story off -- >> i don't think so. when you read the homage to catalonia, it has been nutty, 22% of the gdp over there. catalonia has been this nutty place for 100 years. by the way the ice rink catalonia one time, fifth column, i think it was such an oddity, it's like the communist party italy that my wife is in it's communist you have these areas and it is true that that's the engine of a lot of spanish growth but no, i mean, because catalonians, they don't want anybody to get hurt but catalonia has long been its own. long been its own. >> do you think given what spain has done and bloomberg and

moynahan said about brexit, there was interest in rebalancing towards europe. >> true, but let's go to the numbers for a second did you know that europe, that alphabet's europe was stronger than u.s the business is good 770 million. the continent is working, one after another the industrials is talking about europe is surpassing asia ex-china i think europe has been an additive because of the weak dollar there's no more translation. alphabet said we made this in constant currency and this and they were the same number. europe is very, very strong. whatever happens with political, i can tell you the consumer there is spending and i love the way draghi is getting out of the more as -- we should go to europe and buy suits. >> we have a lot of places to go. >> if you can use expedia,

revenue miss, trivago -- >> you're right. expedia was really bad. >> picked the right time to levy guess. >> he did. >> it wasn't a house of cards just happens to be -- someone was saying it was the kitchen sink typically when i get a kitchen sink i knew it was bad going in. this is a kitchen sink, it was a delta faucet, it was good until this. >> that is ugly. that is sell gi nesk that decline. >> don't you use that term >> it's like friday the 13th. >> that was horrible, that was a terrible quarter. >> and there's one branch. three legg eged stool and it doesn't stay up. when you cut the third leg it doesn't stay up. >> another name is charter, that stock was down almost 7% yesterday. it wasn't as much the loss of video subs which had been

anticipated, what blindsided some investor was broadband not really growing and that concerned them you've got a bunch of people coming out trying to figure out where things stand for their part. >> how is that possible? >> more gan stanley, they don't believe there's been a dint to free cash flow generation for the company. but you can see charter shares down a bit again a lot of that take out premium down now it did get shell lacked yesterday also. >> there's this dichotomy between the cable companies, which haven't been able to merge, versus say the microsofts -- >> well, charter has been able to merge second largest company as a result. >> next level, like walgreens can't merge, baker hughes -- the justice department cares a lot about mergers and doesn't care about breaking up what could conceivably be monopolies.

>> because they are heading towards that way. >> which are these companies >> the big four. >> the big technology companies. >> they are headed -- like standard oil. >> scale is just creating scale. >> the frightful five, we have -- the government weighed in on car safety, cigarettes over time, telecom monopolys but thinks it's nil. >> it's hard what are you going to file suit against zuckerberg to break up instagram. if this was teddy roosevelt's time, roosevelt sat down and said these companies are too powerful, too much of a concentration -- >> they are squeezing out innovation. >> they aren't though. you wonder, are they squeezing -- not as though prices aren't actually -- >> it's in the dna to innovate. >> but there's an argument made

that they are suffocating potential for other businesses to emerge. >> you could easily make a case you can't go up against youtube. it's fut dile -- snap and twitt, i was going back and forth, as long as you stay alive intel won't get prosecuted and justice department went after them but lost in the '90s i could say there's a concentration of power when you have 100 million surface users and microsoft, when ballmer ill advisedly went after janet reno, these companies are so powerful, i could see a populist making a case. >> really? >> the power is cloaked in friendliness and utility and ir resistible convenience -- >> i would not bring the case because they lower the price, i use them a wrong headed justice department might say these

companies frustrated irn no vags i would say they are innovators beyond the belief but i don't trust the government every day it's about some entity trying to challenge these guys, typically now about the russians what's next? do they go after these fabulous american companies we had no pride for long time, remember all we ever were, we made soda and made movies. we're dominant we are dominant where it matters. this this is king and we dominate this we didn't talk about -- >> at least the design. >> but will we dominate rob otices and ai -- i don't know we will. >> i have been into the alphabet robotics center and it is sky net. >> we'll dominate until the end of days and then it will be all over. >> we live, we live. >> you have a place for us

there. >> jim cramer, john conner. >> got it. >> remember who wolfy was? >> wolfy that was the dog -- remember that's how john conner knew -- >> that's deep reference very nice. >> really studied that movie. >> many times. >> what do i make of two stories deckers after potential buyers, no deal and reuters reporting that tenant is ending -- >> we have to watch the bonds in tenant i know they are trying to figure out how to work the rating deckers, shoe wear, this was the week for shoes nike did well. how about the gilead -- >> down almost 6%. my old favorite, comcast charter, both down and the media companies viacom down another 3%, fox down 3%, discovery down 2.5% --

>> they are all down. >> i would assume it's an ongoing concern about what we talk about every day, cord cutting -- >> they think they are losing their edge they think that they are in big trouble that they've made -- not their time. >> it's a narrow market today on the upside. >> everybody inside alexa, it's voice. it's really interesting, broadcom which makes a lot of chips for apple, stock is going down but ynvidia is going higher ai was not allen ifrson, i know you're thinking about number three. ai dominated in a subtext a lot of what was going on in the alphabet call. it was ai was weaved through it. amazon weaved through it they know what you want and give it to you ahead when you want it and artificial intelligence is what makes these companies dominant and we don't talk about it

enough it's why spotify will be worth $40 billion, not $20 billion. >> on a related note, breaking news from apple about the x preorders. let's get to josh lipton >> reporter: good morning, apple did start taking the iphone x preorders. we have a statement from apple about those preorders. let me read it, apple saying to cnbc we can see from the initial response customer demand is off the charts, we're working hard to get this revolutionary new product into the hands of every customer who wants one as quickly as possible. apple bulls are counting on iphone x to be a block buster among the new features you have that larger edge to edge oled screen and face i.d., wireless charging and apple says you should get up to two more hours more battery life than the iphone 7 of course we're also expecting supply to be limited here, at least initially.

it takes usually about three months for apple to come into supply and demand balance when a new iphone hits. some analysts i've been speaking to think it's probably closer to four months for the iphone x we hear a lot more from ceo tim cook probably about the iphone 10 next week when apple reports results. back to you. >> it's going to be a busy week next week, josh. >> thanks for that. >> what do you think about this pushing back against what some analysts have feared regarding enthusiasm >> these are totally 2018 stores, november 3rd for the x 2018 stories, long view. the valuation of a company like apple is so low. i'm not concerned. it really is an inexpensive stock, not like unteintel, 14 t earnings what's of the things that's different than 1999, a lot of these companies aren't expensive and not 2018 and 2019 numbers. i look at an apple and we'll get

to you in 2018 and make a fortune. by the way, all of their suppliers inside -- >> why do they bother with the 8. they should have skipped it entirely. >> i don't know. good question. >> market segmentation, iphone for all -- >> my wife watching everything on the 7 plus we used to watch a tablet, now ifrg on the 7plus. >> that's why people want to create high end content for your phone now, saying -- >> the resolution. >> form factor, time, line for programming -- >> millennials also have eyes so make it this looks like a 70 inch screen. >> those millennials have a lot going on. >> no wonder you're so bitter. >> i hate them millennials live in tents above their cars >> let's get to rick santelli who brought us q3 gdp. >> interesting numbers, back to back numbers and there's going

to be several revisions and sometimes they are big on the week, we really learned a lot. twos are up three on the week and tens are down two on the day and up six, they win at this point up a half dozen on the week why do i bring it up because all of this nervousness that rates will go crazy and they always can, nobody really knows but that doesn't seem to be the modoperandi lately. you see the study upside a bit of a jump. look at one week of bund, doesn't look the same. when you pair them together, you really get to see when they are target how we've die verged lately, thank you mario draghi and expectations but you see it on tens minus bund's chart hovering at 2.03 the widest since mid april the dollar index, this is where it all really gelled together. look at one week of dollar

index. it's like gemini, shot up like a rocket ship. as much as it may be a dollar story because of what our central bank may be doing, what our economy may be doing, there's also a drag hi euro weakness story remember, we talked about that reverse head and shoulders and came out right to the day on the 26 and boom she goes down. same for the euro yen, not as aggressive and we can talk about brexit and i'm sure there's going to be bumps there. maybe the vision on brexit should be how much better off they may be five years down the road than the price to pay now nobody looks at a price to pay now for long term gains. we live in a immediate gratification world. carl, jim, david, the tri fek at a of analysis. back to you. >> love that

>> still to come the challenges facing e expedia, we did get a nasdaq closing high this morning but the s&p still on track for a negative week and dow is down 33 i've been thinking. think of all the things that think these days. businesses are thinking. factories are thinking. even your toaster is thinking. honey, clive owen's in our kitchen. i'm leaving. oh never mind, he's leaving. but what if a business could turn all that thinking... thinking... endless thinking into doing? to make better decisions. make a difference. make the future. not next week while you think about it a little more. but right now. is there a company that can help you do all that? ♪ i can think of one. ♪

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like a small cap today, up nearly 10% markets, though, a little cautious as spain's prime minister is saying the rule of law will be restored in cat alona. looks like the last time amazon 15s up 10%, april of ' get "stop trading" with jim in a minute eant. they really appreciate the military family, and it really shows. we've got auto insurance, homeowners insurance. had an accident with a vehicle, i actually called usaa before we called the police. usaa was there hands-on very quick very prompt. i feel like we're being handled as people

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let's get to jim and "stop trading. >> of the pearl jams, microsoft is unbelievable, but i'm going to focus on align technology, which is visalign. look at that chart like k2, very hard to scale. this is the company that i

wanted him to buy, by the way. i'm going to do it again because there's three themes going on, the data center, the able to buy whatever you want wheneveria want it, and the selfie. instagram. people have to have beautiful teeth because of selfies the millennials. the millennials care more about their teeth than they care for society. that's probably not true they're very societal. >> you have been preaching this for a while. even through ulta and this hiccup >> jcpenny needs to make money somewhere, but i think the trends we're seeing are younger people i know i'm joking about, you know, you take a look at visalign and how good it is, but this changed everything. it changed everything. all the stocks are about this. okay >> i follow him. >> he talks endlessly about how this wiped out so many

industries everything that is about this morning is about this, including the fact that google really harnessed this the fact that microsoft has figured, well, that's the surface, but i'm in awe. but things change. and younger people should be in the stock market they know so much more than older people they should be buying stocks and using their knowledge. older people are focused on jcpenney versus macy's younger people's repository of knowledge is extraordinary and they should be buying stocks and watching this show >> and tonight as well, 6:00 p.m., what are you going to do >> i don't know. take a nap >> take a nap, yeah. >> actually, i'll teyou something. waste management had an unbelievable number. and mind body, that's what i'm about, as you know, david. >> you are about the mind/body connection >> mindfulness >> i am mindful. i'm all over gandhi, like white on rice. >> crush the cards >> yeah.

>> take that >> you're going to lose one one of these days. >> i don't know. i'm eddie vedder this weekend. i'm going to sing "daughter" tonight at the bar going to the bar, i'm going to sing "black. >> "mad money" tonight, 6:00 p.m. when we return, expedia's new ceo on a day where the stock is taking a hit dow is down 24 stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and.

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welcome back to "squawk on the street." breaking news. our october final read on university of michigan sentiments, and it's a whopper exactly as expected, 100.7 this takes uz way the mid-read, which was 101.1. here's the neat part whether it was 101.1 or the new replacement at 100.7, they all comp back to the same high zone. that's january 2004 when we had a 103 handle these are amazingly lofty numbers. if we go through the one-year expectation for inflation, 2.4, one tenth hotter the five to ten-year, 2.5 one tenth hotter than our midterm looks. something to pay attention to especially after the numbers we had with regard to gdp

carl, back to you. >> rick, thank you good friday morning. welcome back to "squawk on the street." i'm carl quintanilla along with michelle caruso-cabrera. sara eisen has the morning off a lot of good things happening around the world tech earnings, microsoft hit a record high. macro is pretty good on q3 gdp >> our road map begins with big tech getting bigger. alphabet, amazon, reporting huge beats after the bell helping push the nasdaq to a record high this morning we'll take you inside their earnings results throughout the hour >> then, cvs health in talks to buy aetna in what would be a $66 billion deal and an answer to amazon's entrance into the health care. >> and expedia getting hurt, following a rough quarter for bookings multiple hurricanes had an effect on travel the new ceo is going to join us after his first earnings call in

that role. >> big technology soaring after amazon, alphabet, microsoft, intel all beat earnings expectations we're joined by the managing director of aegis capital. >> every single one of these companies seeming to hit it out of the park. any weakness anywhere in any of these names? >> if i were to point to one weakness, i would say in amazon. growth accelerated but margins compressed again it's being reflected in accelerated revenue growth it's good for now, but at some point, they'll have to show margin expansion >> we keep talking about it. the shareholders reward them dramatically today they still don't care at this point. >> investors are giving jeffries a pass because he's proven himself. he's built multiple different businesses, struck gold many times, whether it's retail, kindle devices, inhome entertainme entertainment. so now, lujustices, aws, all

these bode well for the long-term health of amazon they could get a significant share of all of these areas. >> key takeaway from all we saw yesterday with the numbers >> the common thread that runs through all of them is these are companies that have a cloud and data advantage, and writ large, they manage to take their legacy strengths and leverage them into the cloud environment. not everybody has been able to do that. you take a look at intel, look at their manufacturing, how they were able to get into the fpga business intel did the best job they have done yet explaining why the mega cloud providers aren't going to be able to really compress intel's margins. the special programmability they're providing to customize, microsoft being a key example for intel, really drove that home in amazon. even though you had the margin compression, in the cloud business, margins were up. so many investors are looking at

the cloud business as a region to invest. that's good news too >> john, we spent a lot of time this morning with jim talking about alphabet and amazon, but microsoft, not as much you know the company well. as you certainly, and the period of leadership would seem to be a great success so far >> it's rare you see a situation like this where it's like you pick it up and polish it off it wasn't a tord like so many investors thought it was there was a diamond under that rock it wasn't just a lump of coal either so what he managed to do, it seems, is not only expand in azure, but also when it comes to office 365, we saw continued growth there on the consumer line, they were up to 28 million subscribers. that's pretty strong the overall commercial cloud hit that $20 billion annualized revenue run rate a year ahead of schedule so that's really what you want

to see >> back to 24% top line growth they have $100 billion now >> a lot of cash >> yeah, i mean, scale seems to beget more scale for these enormous companies >> right i think what you're seeing is that all of these companies, amazon, alphabet in particular, also facebook, they're benefitting from multiple different things happening, whether for alphabet, research, video. also the cloud you know, amazon, you have the cloud as well as retail, and we all know the stories there's a secular turn happening. these companies are benefitting. they're investing against it they had the foresight to invest against these initiatives and they're reaming the rewards in terms of top line growth as well as significant growth in free cash flow. >> given all the competitive pressures we just discussed, is market concentration a story for regulation or not? >> well, i think long term it will be. for right now, i think that the regulatory story or the tag line

across the internet i think is somewhat overblown, but over the next five to ten years you'll probably see stepped up regulatory oversight over the companies. it's one i will watch. i'm keeping an eye on it right now, i'm not too concerned as an investor as far as those companies are concerned. >> what are you hearing on that, john >> to quickly tag on to that, if you look at the numbers. it's hard to make a case for monopoly power especially after this quarter intel was able to make an argument for why cloud providers aren't able to crush their margins. io see amazon getting into the content space where netflix is apple's in there, too. microsoft is in the cloud. any one of these players could compete with any of the others in a moment. they're going to have to >> the opposite argument is made with amazon more than the monopoly argument. >> when the ego's up, the p can go up. a lot of people might tune in today and say, wow, look at these things they have rocketed so much this

year have i missed it, is it too late did these earnings give anybody justification to buy here now? can they get more out of it considering the run they had >> you have to look at the stocks individually. if you look at alphabet, it's a relatively cheap stock relative to the rest of the group >> what's cheap? forward earnings times what? looking backwards is like 37 or something. >> i look at 12 times versus 19 times for amazon, trades as a discount to the gruth. so there's still, i think, you could mablg tke the case for alt because of the different investments and the revenue growth trajectory ahead for them >> the peak would go up more >> it will i think so >> good to have you. >> ccs is in talks to buy aetna. that would be worth $66 billion or roughly that. in direct response, some say, to

rumors of amazon entering the health care industry it also builds on what has been cvs's focus to become more of a health care company in many ways rather than simply a retail company. bertha coombs is at the nasdaq and has more on this potential deal >> this is really about the pressure in the health care field to be able to drive down costs. that's where the opportunity lies in the business while creating a seamless experience for the customer and the customer really is whoever is paying for insurance, whether that's your employer or the government, they want to see those costs driven down. sources tell cnbc terms of the deal would have cvs paying about $200 a share for aetna at $66 billion, a record health care bill. twice as much as aetna's own failed bid to acquire humana cvs is a retail pharmacy, but a big part of their business is in pharmacy benefits. they're number two in that

business they buy the drugs and manage the costs for insurers aetna is its biggest customer right now. merging would allow cvs to be a formidable health care player. >> they're much more than just a pbm. so they're leveraging, you know, in this case, they can leverage the minute clinics they've got they can rev leverage the dwiption, the retail capabilities >> and that would be one of the things that they want to do. the real goal here is to compete with united health group, which is the largest insurer by membership, but it's so much more than that if you take a look below that insurance level, united's optm business has its data analytics, which they sell to other health care companies to really try to figure out what's going on they have also got a pharmacy benefits unit and on top of that, physical groups and outpatient surgery when you put cvs and aetna together, they can mimic some of those parts. on top of that, cvs has the

stores where people can show up and actually buy the drugs itself that would make them a much more formidable adversary to amazon if amazon were to get into the pharmacy business. >> all right thank you very much, bertha coombs >> david, when i look at the way aetna is trading right now >> yeah. >> the advertised price is $200 a share. >> or perhaps more we don't know specifically >> but it's only trading now at $178 >> you have a spread, money, regulatory, everything takes a year these days. might not all be cash, although cvs might have the wherewithal to pull it off but there are any number of reasons. also, we don't have great insight, general reported six months of some conversation between the two ceos, but unclear how deep in they are i would love to be able to get that level of detail i haven't been able to, so we'll see. >> i wonder about, federal regulators blocked walgreens

from buying rite aid i think back to the supersmarkt sector where they didn't want a lot of consolidation to happen, and then boom, here comes amazon, and a lot of marketers argue they could have been stronger had they been allowed here we are, do we still have the same situation where regulators were backward looking and should have allowed it, by the way, a lot of people in the pharmacy sector didn't think amazon would get into the pharmacy sector. >> true. i don't want to overplay the impact potentially that amazon would have on why they're thinking about this deal bertha hit a lot of the key poinltsz, much more than cvs is re-engineering itself to be a health care provider, with the minute clinics, with omni care and aetna. so amazon is going to have impact in any area that it moves into, conceivably, and it has on the stock prices of some of

these companies as the result of the idea it would start to compete with the walgreens of the world, but i'm not sure that's the key reason. >> if i'm a customer of this potential future company, a big corporation, let's role play in the old days, i would have to negotiate with both the pharmacy benefits manager and a health insurance provider, and now, the two are combined >> right, all your employees conceivably would go one-stop shopping and that would potentially bring costs down >> that's the argument, me as a provide toor the company say hey, look, all your costs are going to go down because i have all of this in one box >> much closer to the consumer, can guide them properly. >> okay. we'll see. >> we'll see >> when we come back, expedia shares down almost 19% this morning. as the company posts that big miss on earnings, cutting its guidance we'll talk to mark oak okerstrom. and by the way, nasdaq up 1.5% on track to the best one-day arh lt ce november 7tofas ye

here more intelligence on the search for a fed chair. let's get to steve at hq >> yeah, in the whose's going to be fed chair game for 100, we have a source who is well connected telling us that the president is indeed leaning towards fed governor jay powell. telling us that the president is still undecided, hasn't made up his mind yet but he is indeed leaning towards powell what's interesting is this news,

it was another report on this from another news agency as well take a look at how the two-year has been behaving, and you can see as the possibility of a john taylor, the stanford economics professor chairmanship goes down, yields fall as well. it's the clear belief, it seems in the market, the general consensus that taylor would be somewhat more hawkish. we have the president leaning towards jay powell, but still, guys, not made up his mind there are a lot of different forces coming in on that towards the president, advising him. people with their different candidates you hear a bit of that as each day goes by and a new headline and candidate seems to be in front. we hear the president is leaning towards jay powell >> you said more hawks more hawkish than yellen but less than taylor >> jay powell, yes that would be the idea but the idea would be taylor would be seen more hawkish than yellen, and also more hawkish than powell. powell is seen very much as a

status quo with some change candidate rather than a john taylor who is seen as much more of a change candidate. >> bringing those yields down from what have been a multi-year high this morning after the gdp number >> the gdp number also caused them to go up. >> let's get more on this, bring in allen, princeton university economics professor or former federal reserve vice chair let's start off, what would you think about powell >> i think jay powell, in terms of monetary policy, is probably a continuation of the janet yellen policies. at least for a while until he sort of gets his sea legs on -- in the chair. he's probably a little more conservative than yellen is, but it's not a gigantic difference the bigger difference would probably be on regulatory matters. >> and what way would be a difference on regulatory

matters? >> i think he's probably -- again, i don't want to exaggerate not like night and day or anything like that but he's probably a bit more deregulatory minded than janet yellen is. you know, a shade of difference. >> yeah, there had been some reporting on capitol hill that a lot of republicans were leaning against powell because in their view, reportedly, he hadn't reigned in yellen quite enough on the deregulation front. is that fair >> no, it's unfair it's pretty hard for the governor to rein in the chair. who knows about these things a number of people in the republican right just don't find jay powell right wing enough jay powell is kind of an old line republican. there used to be a lot of them there aren't so many of them anymore. >> which makes you wonder, i guess some wonder, why the president would go that direction when he has a true

showman's decision in taylor, for instance >> yeah. well, far be it for me to get inside the mind of donald trump. i cannot but if we try to think of him as a rational thinker, which is probably wrong, you could look at john taylor as somebody who is going to raise interest rates a lot more than janet yellen, and maybe at least cause the economy to slow down, maybe even cause a recession during your presidency and a lot of presidents don't like that very much. >> steve, one of the reasons that people thought maybe powell wouldn't be the guy is because he's already there he's already been approved now you're going to have to fill two positions. what do you hear on vice chair when it comes to that? anything at this point >> i think that is a reason, especially with an administration that does have something of a back-up, both caused by the senate and a lack of appointments. it will create more work, but i do think they're doing the recognize thing in terms of

finding the right person for the job and letting that issue of additional work. i do want to say something about powell and deregulation. i did two interviews with jay powell here on cnbc, and i want to point out that in the rarefied world of going against the chair or against the prevailing wisdom at the fed, jay powell went pretty far with me when it came to talking about deregulation he talked about scrapping or rethinking the volcker rule. he talked about the needs for changes that weren't consensus on the board one other thing i want to point out which alan was alluding to, part of what's going on here is a desire to change the fed through personality. there are republicans who have concerns about things the fed has done, which have been within the mandate given by congress. and they're angry about that mandate and the way the fed has acted. what troubles me about this prosa little bit is trying to change the law through the personality rather than changingish the law itself if you don't like what the fed

is doing and you're in congress, you should change the law, not necessarily try to affect that change through a personality >> change the mandate away from being focused on both the unemployment levels and the strength of the economy? can i ask you a little more process. should we assume, i assume janet yellen is not in the running for vice chair not going to take a demotion can we assume taylor and warsh are now in the running or do we start all over again or is taylor thinking i want the number one job, i'm not taking number two >> you get into an ego problem even when people disagree about how taylor interprets his own rule, and people think it should be interpreted in a different way, still, very well regarded john taylor gave a great speech in stanford earlier this spring where he said, look, we have to bring everybody into this thing. it wasn't a harsh speech very much the way kevin warsh gave a speech that was very critical of the existing fed

structure. i don't know that john would take the vice chair position, but perhaps if asked by the president and the president said i need you to serve in this role, very much in the way stan fisher, another imminent economist, served as vice chair for janet yellen >> i didn't misspeak the double mandate is of course inflation and employment levels. not employment and the economy >> the thing that upset congress was the $4.5 trillion in quantitative easing. r you don't want the fed to have to do that change the law >> give me a read, u.s. gdp growth, third quarter, 3%. annualized, a bit better than expected in terms of 2.6 what's your overall view the inflation deflater jumped 2%, and the savings rate may have declined. your thoughts? >> i haven't had the time this morning to pore over the details, but my understanding is most of the little surprise, not a huge surprise, the upside

surprise in the gdp came in inventory investment, which tends to get reversed. not always, but typically gets reversed in the following quarter. so the economy has been looking good it is still looking good i don't see this report changing it very much >> okay. we have to leave it there. steve, thank you of course, for your reporting. mr. blinder, appreciate your time thank you. sure >> want to turn to expedia this morning. shares down nearly 20% after the company's 30 quarter earnings failed to meet expectations. they see a drop in bookings and increase in cancellations during the hurricane season for more, let's bring in ceo mark okerstrom he joins us after his first earnings call as ceo from seattle. good to have you with us >> great to be here. >> you think the stock reaction this morning is about bookings >> well, i think there's a reaction to some short-term impacts. and you know, really those two are the impacts of the storms. we said it was $15 million to $20 million of impact in the

quarter. another $10 million potentially hitting us here in the fourth quarter. and secondly is the impact of trivago, which we own a majority of, which is having some challenges if you put those aside, what we believe and what we see is that we see an incredible opportunity ahead of us. and we are investing into strength we're investing into home away, which is on a great trajectory we're investing into that business to make it go even faster and we're investing into our core business, which we have seen our ability to add new properties go from 30,000 about three years ago, this year we'll add about 85,000 next year, we're going to really ramp that up, so we're investing to strength, and we're pretty excited about the opportunity ahead. >> we have seen some swings in currencies the dollar index today at its highest since july how does that affect the quarter, if at all >> well, it wasn't a big impact for us from the quarter. in fact, you know, currency, the weakness of the u.s. dollar, year on yoor, was a little bit

of a helper for us it wasn't a big impact for this quarter. >> mark, anecdotally, i find that hotel companies are working very hard to get me to skip over your site and go to them directly either through their loyalty programs, all kinds of things. is there anything -- and i think it turned out to be successful anything you can do to combat that >> well, we can do exactly what we're doing right now. i mean, we have built an incredible platform, really for shoppers to come, and customers to come and see all of the properties if you look at new york, for example, we have about 1,050 properties in new york, an incredible selection you compare that to even the largest hotel, they have about 50 we have an incredible selection. we offer great prices. we offer great service a lot of it is about doing exactly what we're doing right now. so far, things are going well for us this quarter, we're up 16% for you normalize for the storm, up

17%. that's about three to four times as fast as the overall industry. things are working, and we're optimistic they'll continue to work for a long time to come >> an investor would hear you say that and look at the stock next to you and say, what are you talking about? you're losing almost 20% of your mark value today, mark doesn't that concern you >> well, sure, it's a concern. but i'm not running the stock. i'm running a company. and when we look at the company and the strength that we are seeing right now in operations, we look at the size of the opportunity ahead of us, we look at the track record that we have displayed, we're incredibly optimistic for the future. >> there's been a lot written about, i guess, differences that you have regarding organic growth versus growing through acquisition from what dara had in mind. how much of that is true >> well, i think there's absolutely no difference in our opinion. we basically together built an incredible company over the course of the last six years we have assembled an incredible

portfolio of assets, and the next phase is about taking those assets and operating those even better than we have before you know, again, this opportunity is huge. we have laid the foundation for incredible growth going forward. and my job is to actually deliver on that growth there's no difference, in fact m & a is in our dna. it will always be part of what we're doing. but the next phase is really about execution. >> well, dara was kind enough to join us most quarters. we hope you do the same. good to have you this time >> no pressure >> mark, thanks. >> great to be here. thanks for having me on. >> mark okerstrom, the new ceo of expedia dow down seven points. we're watching headlines regarding the fed chair and powell moren athe"sawon oth wn quk the street" continues in a moment. cs 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.

volatility is unprecedented. this is an opportunity to get good charts. >> i want a higher rate of return >> they don't think it's going to last. >> what do you do with your money? >> another wild week good morning, everyone i'm sue herera here's your cnbc news update at this hour. more than 2800 secret government documents about the assassination of president john f. kennedy have been released. but the white house says it is holding back more than 300 additional documents, at least

for now. some federal agencies believe information in those documents should remain redacted due to concerns over national security. >> youtube is taking on traditional television viewing the video service says ewers are now watching 100 million hours of clips a day on actual tvs that number is up 70% year over year >> the most expensive rolex ever was just sold at auction for $17.8 million. the watch used to belong to actor paul newman. yesterday's sale set a new world record for a wristwatch sold at auction. >> and the first sierra ski slope opening for the season this weekend, and yes, it is still october. but mt. rose is opening up one trail with nearly all of the snow being manmade this is the earliest kickoff in that resort's history. that's the news update this hour michelle, back downtown to you >> all right, thanks very much, sue. >> as we head to break, take a look at shares of jcpenney the retailer getting crushed after cutting its guidance and

accelerating an effort to once again revamp its inventory stock currently down more than 15%, nearly 16%. next, the race is on 238 cities are vying for amazon's second headquarters jim stewart gives us his top six ayitusk.ter the brea st wh question.

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the answer company. thomson reuters. shares of amazon up 10% this morning. the first time in a couple years. the company delivering blowout earnings tenith straight quarter of profit now employs more than half a million work s, adding nearly a half a million workers to its head count in the last year it's considering applications from more than 230 cities vying to become home to its second headquarters "new york times" columnist jim stewart is with us, handicapping some of the applicants, narrowing down the potential cities to about six. pittsburgh, baltimore, philly, toronto, chicago, and boston jim, great to have you >> thank you, good to be bark.

>> if you had to put money on one, what would you do >> i put those six in order. and pittsburgh is the top of my list nothing is perfect, given all the criteria that amazon put out, but i think their first and paramount importance is site and building after doing a lot of reporting, conversations, they want an urban infrastructure that amazon can integrate into where employees will not be locked up in some kind of isolated headquarters, but they'll be mingling, going out into the fabric of the city, they'll be drinking their, you know, fancy coffees. going to artizinal cheese shops or whatever you do in seattle, and this is important to their culture, it's important to the creativity, important to attracting the kind of workforce they want. i basically said, to find that urban core, you need one of the cities, one of the older cities

in the northeast or the midwest. and that's kind of started my analysis >> a lot of the cities' pitches have been help us reinvent our entire city. is amazon feel that's their responsibility >> well, no. their primary responsibility is to shareholders, but if reinventing the city means working for the benefit of amazon, i think that does appeal to them. i mean, i think it's really interesting that recently, they moved into the old macy's headquarters or they're going to in downtown seattle. i can tell from talking to amazon people, they're really proud of that. they love the idea that they're repurposing this historic structure. of course, the irony that they're moving into what was once the major retailer in america, if not the world -- >> some people might look at that and look at it as the final knife. >> let's put that aside for a moment they like that thing and see it as mutual benefit. benefit to the town, benefit to amaz amazon, and synergies that will

help them both i read earlier on amzone, and something bezos said is when all is said and done, he wants something he and amazon employees can be proud they created. and i think they pass that threshold with look at the earnings today the juggernaut that amazon is today i'm sure is beyond anything maybe even bezos dreamt of but when factoring this, they're not going to move to new york. amazon coming to new york isn't going to change anything, not to mention the fact that it's really expensive that would be some kind of incremental thing. if they move to a pittsburgh or a baltimore, number two on my list, that was kind of a surprise to me, or philadelphia, this is transformative somebody will look back on the cities in the future and say there was before amazon moved in and after amazon moved n >> you keep saying moved they're not moving their headquarters, but that's what's interesting. did you pick up anybody explaining why they need a second headquarters and whether there's a concern at all in some

way? i can't think of another company like this that has two - >> there are a few i interviewedthis expert in switzerland who has done some pretty deep studies on companies that have done this. most of them are global. they want a headquarters in, say, asia and europe, but they have markets like this this is very unusual i think the number one reason is they're bumping up against the limits of the talent pool in seattle. they're bumping up against the infrastructure of seattle. they can't -- they've got 44,000 people working in seattle now. can they have 100,000 people working in downtown seattle? i just don't think that's feasible i think that's number one. number two, they really don't want to get caught up in this headquarters syndrome where it's some kind of, like, everybody else is a second-class citizen like the bureau or whatever. and this is going to send a message. first, they're going to have another 50,000 to 100,000 people

working somewhere like this, and they're going to feel empowered. there is a lot to be said, given the size and scope >> one of the key takeaways is they don't want people to have to drive to work they want people to walk they want them to take public transportation >> i don't know that amazon cares that much, but the kinds of people they hire and want to hire want to walk to work. they're not interested in driving a car. they want to ride their bicycle. again, one of the things i looked alt is where are the people walking and biking, and where are the bike paths and the infrastructure to support that you come back to the urban concentrations of the older cities in the northeast and the midwest. >> some have argues that bezos is playing these cities in a very public almost gauche kind of way you think that's fair? >> i don't think that's fair first, they're getting enormous publicity out of this, but they're opening up the competition. they want to see what creativity can we trigger how can we leverage our size

they're not urban planners but let's see how creative people can be. >> are tax breaks not important to them? >> they are important, but looking at only tax breaks is too narrow what if, for example, they said we're going to guarantee a sarn number of jobs for the graduates of your high schools or we're going to offer that there's all kinds of creative things they're looking at, not just dollars and cents >> gives us a chance to draw a line between amazon and wholesale pharma licenses and what cvs is reportedly up to >> yeah. i mean, i wouldn't want to put too much emphasis on that. i mean, but i'm sure looming in the background for the drug companies -- i mean, it's an obvious target for amazon. they're going to mow down grocery stores what's to stop them? this is another retail transaction, which by the way, anybody who is a customer feels the experience could be greatly improved and online could go a long way towards doing that. you have to see cvs, aetna, a

big insurance company melding with a retail operation. and we'll see what kind of synergies there are. that's a really vertical integration. amazon hasn't shown much interest in insurance, per se, or financial -- it hasn't yet shown any signs of wanting to be a financial services consumer. but who knows. maybe one of these days it will be a bank, and you know, why not. online banking so i don't want to say never, but i think amazon is a threat on the retail level, but that this insurance angle is a clever way of side stepping the direct competition. >> pittsburgh has falling water and the warhol museum to add to the attractiveness of pittsburgh >> i can't say i have been to any one of these cities, but i have been to the six finalists, pittsburgh, i think has been underestimated it has a very attractive urban core, a very vibrant sense of

reinvection. a lot is happening there >> big sports teams. >> it's got the sports team. pittsburgh has a lot going for it >> i think we had rendell back on a while back talking about the impact of carnegie mellon, uber has done some driverless testing things there during the campaign, the president was saying disparaging things about old line cities, and people said pittsburgh isn't one of them. >> and let's not underestimate baltimore. people think of "the wire" and the drug deals, but i got off on the amtrak there once, great infrastructure downtown. it was ranked by this tech survey number 11 in the country for tech workers actually ahead of pittsburgh so again, i think baltimore has a lot of slumberring potential that people don't recognize. >> a good piece, jim can't wait for everyone to see it thank you. jim stewart of "the new york times. >> could be a travel writer. >> right >> don't joke. >> he really could when we come back, more on the

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three well known classic american stocks are among the biggest losers since the election we'll talk their names and whether they're worth your money add tradingnation.cnbc.com six in the morning. she thought it was a fire. it was worse.

a sinkhole opened up under our museum. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe. we had everyone we needed to get our museum back up and running, and we opened the next day. let's get down to the cme, rick santelli and the santelli exchange morning. >> good morning. thank you, carl. i would like to welcome my guest, doug. thanks for taking the time >> sure, my pleasure >> all right you saw gdp, 3%. not bad. price index, 2.2 core pce, 1.3. those are all a little hotter. give me your impression of today's data >> the more important was the final sales number, 2.3% the top line was really inflated

by a big inventory build so 2.3 is consistent with what we have seen over the past several years. got knocked down a little bit by the hurricanes we have a strong hushold sector. good orders for investment goods. the fourth quarter will be a little better than this one. if you take that to inventories, 2.5, 2.6 >> excellent all right. now in a former life, you were cbo director and it's to that moniker i want to put my focus for the rest of our time listen, all the talk is about tax reform, tax cuts, and of course, the kicker of growth that we need but, without reform of entitlements, i'm channeling alan simpson here, you need a whole lot of growth versus if you tackle it, and in the time we're in politically with the way the parties treat each other, i don't think there's a prayer a politician could be honest with the public about

entitlement reform without another party coming back and saying, they're being mean spirited we don't need to do it what are we to do? >> well, i think you're on to something because first and foremost, we cannot grow our way out of the entitlement problem there's no plausible future growth rate that gets us out of the issue of coming to terms with the entitlements. secondly, this problem is here this is no longer something off in the distance. inside of ten years. we're running well over trillion dollar deficits, and it's all the entitlement programs they need to get fixed because saling into a sovereign debt crisis is not a pro-growth strategy we can't do that >> let me interrupt you, doug, real quickly that's at a time where the global debt is, what, 3.3 trillion dollars it is unbelievable three times global annual output i just don't understand. in the time we have left, do you have any suggestions how we

could chip away to get where we need to be >> so i think the key is to recognize that these programs need fixed in their own right for the beneficiaries. social security is the best example. in 17 years it's going to go bankrupt and we're going to cutt benefits 25% across the board for all people in retirement that's ridiculous, an embarrassing way to run a program. put aside the economics and say, look, can't we have a social security program to be proud of? let's get these things fixed >> i got you i'll tell you what, it's a bit depressing, but there's always a way out. we just hope it doesn't happen after another crisis doug, thank you. hope you have a great weekend. david faber, back to you >> thank you very much, rick santelli let's send it over now to john fortt and get a look at what's coming up on "squawk alley." john >> good morning, david intel chief financial adviser is going to join us after blockbuster earnings that had that stock up 5.5%

we're going to dig in oeronth tech earnings, as well, coming up on "squawk alley" ♪ it's not just a car, it's your daily treat. ♪ go ahead, spoil yourself. the es and es hybrid. experience amazing.

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big tech is a story today, but so is retail jcpenney slashes its profit and

sales forecast this morning. that is, obviously, weighing on the rest of the sector with names like macy's and kohls down in sympathy. long discussion this morning about what some of these legacy retailers are going to do. in the meantime, jcpenney says it's about liquidating women's apparel. >> seems like deja vu. >> i go back to the dividend yield on macy's. you have to wonder if people look at that and figure there's a shot i can take at something, or is it -- they don't have to, but might want to get it in line with the rest of the group and save money chevron and exxon reporting earnings this morning. jackie de angeles has more on results. >> mixed earnings for big oil this friday morning. while energy companies are still facing challenges, there are still bright spots emerging. exxon was the earnings leader on over $66 billion in revenue.

earnings were up 50% year on year after a four-cent hit caused by hurricane harvey the company credited higher commodity prices and better performances in enp and refining services as the main drivers for the quarter. chevron in earnings on a little over $36 billion in revenue, but it was a miss. the main issue for the company, a drop in u.s. production and asset sales. earlier this week conoco phillips beat expectations but a reduction in 2017 cap x by 10% signaling companies are still being cautious in the current environment. of course, crude prices are the key here take a look at oil, prices have climbed steadily back over the $50 mark, but concerns they may not stay there can't be ignored. if opec doesn't extend its production cut, that's all potential for another fall back into the 40s, but persistent troubles in iraq, venezuela, and

the question mark surrounding iran's supply all reasons the market could see price disruptions, keeping prices elevated what happens next is anyone's guess, but big oil doesn't seem to be out of the woods just yet. guys >> really quick, we had the saudi crown prince support this nine-month extension idea, the secretary-general sort of welcomed that. is anyone arguing forcibly not to do that >> not at this time, carl, and definitely they are talking it up, putting it out into the marketplace. i don't think they are going to play their card too early. they are going to wait and see how things advance, but there's no one against the extension at this point >> jackie, we'll watch to see what the energy complex does very soon. jackie, thank you. when we return, intel did beat on earnings and revenue, raising guidance on those results, stock's up 5% we'll talk to the cfo bob swan next on "squawk alley" in a fit rson cnbc interview you do not want to miss don't go away.

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that matter most. get ready, because we're helping leading companies see it- and see it through-with digital. welcome back to "squawk on the street," i'm dominic chu tech no surprise here leading the s&p 500 sector, the biggest

sector following strong earnings from the likes of microsoft, alphabet, intel, all hitting fresh all-time highs today, also helping to lift the ticker slk popping 2%, hitting its highest level since the height of the tech bubble march 2nd of 2000. that does it for this hour on "squawk on the street. let's send it down to the start of "squawk alley." back over to you >> thank you good morning, it's 8:00 a.m. at amazon headquarters in seattle, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪