is live. ♪ ♪ good tuesday morning, welcome to "squawk alley." i'm carl quintanilla with john fortt, sara is off today joining us this morning, professor at nyu's stern school of business. a lot going on today a very bullish call from former facebook executive on bitcoin earlier this morning take a listen. >> same way that i said in 2013 put 1% of your net worth in bitcoin, i think this thing is $100,000 a coin probably in the next three to four years, and i

think it is in the next 20 years a million dollars a coin >> comes after s.e.c. chairman jay clayton put out a cryptocurrency warning saying if an opportunity seems too good to be true, exercise extreme caution. not every day you get something like that from the head of the ftc. where's your thinking on bitcoin prior to this run-up and now that it has gone so much higher? >> i think bitcoin is basically an inverse mistrust index, and that is as we lose faith in institutions, it goes up a prediction, if roy moore wins the election today, bitcoin goes uptomorrow it's young people saying they have no faith in our institutions >> or is it kim jong-un making good and getting around all skien kinds of international chaos >> chaos is good for bitcoin economics fail throughout history, so if you don't believe in the federal reserve, buy bitcoin. it's sort of a mistruster, to

your point, john, chaos process. >> what about the concern that some have that these are nonsophisticated investors that are really driving this action, maybe even particularly in asia. is that concerning >> versus the sophisticated investors driving the nasdaq >> sure. >> look, it's easy to say this is a wonderful vehicle for, quote, unquote, bubble because if someone calls a million dollars a coin, they don't have to point to earnings or multiple expansion. they can make these big, bold statements and so far history is on their side. does it hit $100,000 and is it a bubble yes, who can predict when? the economists perfectly predicted the dot com bubble, what happened, who would go first, but predicted it in 1997 and the market went up 30% to 40% from then. is that bubble, will it skyrocket? i think the answer is yes. we just don't know when these things are going to play out >> do you believe the price is being controlled by an extremely small pool of people, who held

it for a very long time? >> i mean, you know the numbers, you've heard them, right 1,000 people holding 50%, something like that. >> it's a great question, carl it's like when you ask people how they feel about the economy, all you need to ask them to understand their answer is whether they voted for clinton or trump if they voted for trump thing the market has been unleashed by regulation and tax cuts and if they voted for hillary, we're in a bubble same if they are an early investor, they think it's going to a million bucks if you're like me and have fomo because you never got in, you think it's a bubble. what you think of bitcoin, simply put, do you own any >> what do the kids at nyu think? >> going off script, every year 150 students we give an economic excellence award to someone in our class. who won that award in 2013 courtney >> yes, now she goes back and teaches occasionally >> the kids at stern, i think,

are interested in anything gaining credibility and it's kind of the next wave and the media and even some of our regulatory bodies are adding a lot of credibility to bitcoin, so i think kids are really interested in it >> talked about a lot more than that this morning, of course, a former facebook executive, and he made provocative comments about social media and society >> i think the tools that have been created today are starting to erode the social fabric of how society works, and what i meant by that is the following thing, today we live in a world now where it is easy to confuse truth and popularity and you can use money to amplify whatever you believe and get people to believe that what is popular is now truthful, and what is not popular may not be truthful >> facebook just responded to his comments and julia boorstin is here to bring us that good morning, julia. >> good morning to you, carl that's right, facebook issuing a statement saying he has not been at facebook for over six years

when he was at facebook, we were focused on building new social media experiences and growing facebook around the world. facebook was a very different company back then, and as we have grown, we have realized how our responsibilities have grown, too. we take our role very seriously and we are working hard to improve. we've done a lot of work and research with outside experts and academics to understand the effects of our service on well being and using it to inform our product development. we're also making significant investments more in people, technologies, and processes. and we are willing to reduce our profitability to make sure the right investments are made carl, i think it's worth noting here that reference that this statement makes to the last earnings call. mark zuckerberg was very up front saying they are aware of the concerns and very much investing in trying to address those concerns and make sure that facebook is a force for good, but it's notable that he is one of a number of -- several, i should say, investors who have called out facebook

we also heard from roger mcnamee, who had similar concerns this is really something that facebook really wants to get on top of and make clear that he's not been part of the organization for quite some time >> that's understood, julia, thank you for that julia boorstin scott, essentially he's saying the truth is for sale, is he not? that's essentially the core of his message. >> yeah, but it appears our society that if you stay alive, you repeat a lie over and over, becomes less of a lie and i think this is probably true across different mediums we've never seen mediums this good at it when you have bots and you have -- facebook is probably guilty of giving credibility to fake news when they put legitimate news next to it, and when you have effectively the most powerful media company in the world, and let's be clear, there's never been a company more of a media company than facebook, when it can be weaponized for people paying with rubles, there's serious conversations that need to be had. i'm almost --

>> any better when paying with bitcoin? also, i mean, i wonder, there's a kind of frankenstein's monster feel to this you've had sean parker come out and be critical of what facebook turned into. now chamath, the first real growth hacker there. if he doesn't know what's going on right now, he knows the dna of the company and the intent behind the growth that's brought it to the point of being 2 billion plus strong. how's this line up with your thesis in your book "the four" and what facebook is really trying to tap into in our society? >> facebook is trying to tap into more and more earnings. these companies are doing their job and growing earnings people not doing their jobs are us, because we're not electing officials to hold the companies to the same standards. if you were weaponized by an intelligence group of russia, i think there's a chance the next day they would have set the network down for some reason we give these companies a hall pass. try to take your ipad away from

your kid and you hear your 7 year old say note to self, must kill dad can you imagine the labeling and studies around that? we're finding this out about social media, but for some reason they play by a different set of rules because we worship at the altar of innovators and shareholder value. these guys get the mother of all hall passes and we're just beginning to have a serious conversation around the downsides. >> you think that's coming >> i think it's happening right now. the straw that broke the camel's back was the weaponization by foreign adversaries and people are fed up you're going to see, in my opinion, 2018, your last episode, '18 is going to be about crypto, strange bedfellows, mergers we weren't considering, and about the regulation of big tech >> that's going to look like, what individual posts will say this is false, this is true, come

with warning labels? how do you regulate it >> two things. mother of all fines is going to come out margaret vestyture, but we're going to have a conversation around trust busting what do you think, an ecosystem with facebook or ecosystem with facebook, instagram, what's app, google, youtube, amazon. what broadens the tax base with more jobs, more competitive, more millions with fewer billionaires, ecosystem with 12 of these guys. big tech fomented this narrative that when guys like us say it are socialist or european, breaking up these companies, not because they are evil or avoid taxes. we should break them up because it is a capitalist thing to do >> wow break them up. based on what principle? >> when companies are very successful and aggregate too much power, they commit early

death on big companies that are better employers and infanticide. if the doj had not moved in on microsoft in the late part of the last millennium, would google ever got out of the crib? trust busting is the capitalist thing to do. it is time break them up. >> we'll see if that comes to task a related note on this, new details on a potential disney/fox deal. expected to be announced as soon as thursday as comcast drops its bid for 21st century fox can we talk about trust busting when you have so many other media companies fighting over eyeballs, as well? >> that's what's so insane about this at&t/time warner is supposedly too powerful, 130 million contracts, 30 million directv and cnn and game of thrones, great content. amazon, 62% of households, $4.5 billion in content, apple, 40 million videos, 25 million songs, a billion devices, but

at&t needs to sell the cartoon network? two things is happening here, either at&t/time warner called to break it up, but we should have broken up the big four five years ago, because the content and distribution peanut butter algorithm of these four dwarves the combined at&t and time warner >> when you've got two dozen companies, round number, all fighting each other, all somehow too big, isn't there a contradiction there? you've got enterprise players trying to get into consumer and vice versa that sounds competitive to me. who cares how big they are >> well, you care if small companies can't get out of the crib and every consumer stock trades on three things, one, underlying performance of the stock, two, macro environment, and, third, what amazon is or isn't doing that morning, that sector any consumer stock in america

can be taken down 30% with press releases from amazon >> i think 70% since this ipo, even though it was rough at first. >> there's one blue apron is down, cvs and walgreens go down 4%, 5% when amazon threatens to go into prescription drugs kroger, larger grocer in america shed a third of its value in between the time amazon announced the acquisition of its company 1/11 the size of kroger. no one individual or company has too much power and right now we're headed towards this amazon singularity where this company can perform mind tricks and look at another company and begin inflicting pain on it. they've become too powerful. teddy roosevelt broke up companies. it's not regulation, it's the anecdote, the vaccine, that hands back regulation. trust busting is the opposite of regulation like i said, i think it's time

>> 2018 sounds interesting if, in fact, what you're saying is going to happen. thank you very much for coming in, scott galloway, author of "the four. when we come back, the ceo of a gaming company that's stock is up about 120% this year, take two interactive. what do the other former facebook executives have to say about chamath? we'll ask one of facebook's founding members to weigh in and spacex going where no company has gone before, preparing to blast off a reused rocket we are at the launch site the day before the exptelach ensquawk alley" comes back alerts -- wouldn't you like one from the market

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grand theft auto 5 came out, what, four years ago >> four years ago. >> still enormous, and you've got this add-on, you know, online play. break down a bit how that works, because folks four years ago thought that mobile was going to eat the traditional gaming business, it was doom and gloom,

yet you powered straight through that >> look, mobile gaming is a growth business. $45 billion market, continuing to grow, and it's great it's brought in a broader demographic, so it's all good news and we're in that space, as well that said, giving consumers a fantastic console gaming experience is extraordinary. it's deep, it's captivating. and people can spend tens of hours or hundreds of hours playing a great video game "grand theft auto" is the biggest selling video game of all time >> 85 million? >> sold 85 million units so far, and as you said, it's setting records four years after its initial release. if you buy "grand theft auto 5," you can play online. most people connected to the internet choose to try and play it and "grand theft auto" online is having a record year. >> if any company, any industry, makes sense to have initial coin offerings, it's the gaming

business, right? here could be, you know, coins that you buy and spend across all your titles, for example, but i don't hear the take two interactives, eas of the world jumping into this space. why? are you thinking about it or staying away from it >> i have a good deal of skepticism about the space concerned about it i have regulatory concerns at the end of the day, you need to give consumers much, much more in value than what you extract from them. i'm concerned of some of the ipos may have done the opposite. that's not how we operate. we're in the business of exciting, entertaining, captivating, engaging people monetization comes second. we're not looking -- we're not looking to find a way to outthink the consumer. we're just trying to find a way to entertain the consumer. >> is the average user or player aging along with the franchise, or is it getting passed down to i don't want to say generations, but underaged players?

>> such a great question, you know, the average age of a video game player today is 37 years old. that's because people consume for the rest of their lives that which they consumed at 17. you know that anecdotally. the music you like is the music you liked at 17. if you were playing video games at 17 and you're 35 or 45, you're still playing them. the game business is only about 35 years old as the business continues to grow, as the cohort ages, our market continues to grow put it in context, about 93 million current generation game machines out there by 2020 we figure there will be about 140 million. obviously, the wind is at our back as an industry. as a company, that doesn't guarantee success. we have to execute >> mobile to growth platform, but also e sports, you're looking to add the nba what's that going to look like, 17 of the 30 teams are signed on

for multiyears so far, right >> right there were some announcements yesterday, there's a website now. if you want to try out for the league, there's information about what that's going to look like there will be a draft. there are going to be teams, coaches. it's five on five play, there will be a season starting in 2018, there will be media related to it. it's a professional sport. our goal is to launch the first competitive gaming league based on a professional sport. we did a couple of tournaments for basketball a lot of people played and watched them we're really excited about this new venture with the nba >> what's the big picture strategic lesson from what we've seen happen technologically over the past, say, four or five years? and let me frame it this way, we have the wii and the idea was mashing buttons on a controller, that's boring. nobody wants to do that anymore. we had kinect and 3d, all these different things that went by the wayside. who knows whether vr is really going to take off.

right now it seems like a side car to the main business, yet connecting, e sports and broadband seems to be the driver how do we get here >> i think you're right. the fact is that with regard to audio/visual entertainment, when we look at a screen, we experience it as 3d and immersive already, so i'm not sure the technologies that enhance immersion or create a 3d experience really are as important as the quality of what you create, the game play, the story, the characters. our goal at all of our divisions is to make the highest quality entertainment bar none, across every time of entertainment. we've done a good job, highest third party scores in the business and if we do have a miss, you know, we're deeply upset by it. not for economic reasons, but because we have a compact with our consumer we make the best quality entertainment on earth that's our goal. >> staying away from bitcoin,

diving deep on those areas, how closely do you look? you've got about almost a dozen franchises now that are pretty big. how closely do you as the ceo look at those? are you playing these games beforehand and sending feedback like a bob eiger is watching these movies and sending feedback ahead of time >> i suspect our 3,600 colleagues are thrilled i don't play video games the president of our company does play video games. i'm responsible for -- for making sure that we all have a strategic plan that we follow. we try to be the most creative, innovative, and efficient company out there. i greatly appreciate fantastic stories, great characters, beautiful graphics it's true, i can't appreciate game play as much as i could if i were actually a gamer. that said, i don't need to be the consumer in chief. my goal is to work with our entire team around the world and focus on quality and focus on engaging and captivating

consumers. >> it would be funny if he had to finish the game, beat the game each time >> it would be a very long time. >> not going to be a power forward, i guess strauss zelnick, ceo of take two, great insight >> thank you as we head to break, check out shares of boeing rallying after the company boosted its dividend $18 billion buyback plan "squawk alley" is back right after this stick ths.wi u

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it's a day we saw data on uk inflation at least we saw uk inflation rising close to a six-year high here and larger than expected decline in german economic sentiment with chancellor angela merkel still attempting to form a coalition government in that country european oil majors growing

after a major north sea pipeline was shut down due to a leak with repairs likely to take weeks 3% moving on to m & a transactions westfield agreeing to be acquired by europe's biggest property group $15.7 billion in cash and stock. includes debt. the enterprise value total becomes around $24.7 billion the deal gives unibyle exposure to the u.s. and uk, as well. the combined company would have more than 100 shopping centers and shares falling on the news at least on the deal, that deal's news. meantime, soaring after the smart card maker received an unsolicited takeover offer they'll review the bid and responded by the friday deadline we'll finish with the uk supermarkets down sharply figures show each of the grocers

is losing market share in the 12 weeks leading up to december 3rd. their biggest rival saw a fractional decline certainly a lot of moves here on the company side, john, in the uk markets back over to you guys. >> all right, thank you, dom coming up this morning, we heard from chamath, he ripped the social media giant for its effects on society what another very early facebook employee, andrew mccollum, thinks of those comments "squawk alley" back after this he spent decades fighting to give families a second chance. but to help others, they first had to protect themselves. i have afib. even for a nurse, it's complicated... and it puts me at higher risk of stroke. that would be devastating. i had to learn all i could to help protect myself. once i got the facts, my doctor and i chose xarelto®. xarelto®... to help keep me protected. once-daily xarelto®, a latest-generation blood thinner... ...significantly lowers the risk of stroke

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good morning, everyone, i'm sue herera president trump and new york senator kristen gillibrand exchanging words on twitter this morning. trump in a suggestive tweet calling gillibrand a lightweight and criticizing her call for him to resign over past allegations of sexual misconduct she responded by saying trump's tweet was a sexist smear and says he can't silence her and millions of other women who have spoken up. former secretary of state john kerry taking a strong stand against president trump's decision to pull out of the 2015 paris agreement. he accused the president of making the decision for political reasons. >> whiledonald trump may have pulled out of paris, the american people have not we remain committed to the paris agreement. and it's important for people to

know that. >> san francisco mayor ed lee has died his office saying he passed away at san francisco general hospital surrounded by family, friends, and colleagues. no cause of death was given. lee was the 43rd mayor of the city and the first asian-american he was 65 years old. that is the news update this hour back downtown to "squawk alley." carl, back to you. >> sue, thank you very much. more content companies going direct to consumer, obviously, offering streaming services. filo is one recent entry offering a skinny bundle including a & e, discovery, scripts, and viacom. ceo of filo and facebook's founding team, welcome back, it's good to have you. a large part of what we hear all the time is live sports is the only major draw that's left in programming. you don't believe so, why? >> well, i think that's been the conventional wisdom for a while, that you can't have a live tv

package without live sports, but the truth is, those channels also comprise by far the largest component of the cost of a typical cable package and there's a lot of people that aren't interested in sports, so we wanted to create a tv package for those people so they could get a really great selection of channels at a much lower cost. >> what's the criteria that decides which channels you include in the bundle? >> well, i mean, it's complicated. it's driven by a bunch of different things, but primarily before we launched the current version of philo we had the tv service available on universities and spent six years collecting detailed data about what people watch, what people care about, what channels are important, and we've really used that data to guide how we create a package that gives people the best value for the price they are paying and we continue to use that in

really all of our conversations with content providers >> when you look at youtube and its scale, massive scale, the audience that it has, the traffic it can drive to videos, later they seem to figure out are not very brand friendly, to say the least, where do you think that philo sits in the ecosystem of professional video, and is your share going to grow for any particular reason because of shortcomings of platforms like youtube >> well, i think there's a bunch of different players in the overall video ecosystem. sort of traditional youtube, which is, you know, cat videos and all of the sort of stuff that people have been watching on youtube for quite a while, you have their more recent entry into traditional tv, which actually is a great complement to philo they include a package of channels that's pretty much most of the channels that we don't provide. so if you really want a complete

tv package, you can combine the services together pretty easily and get a great selection of channels, but i think overall we definitely have a view that we want to have a curated package of content, that we're not a user, you know, user-driven video platform we want to have some choice and deliver a set of really high quality channels and content to the user i think that overall our segment of the market, which is, you know, cable packages over the internet, virtual mbpds is going to grow tremendously hard tosee in five to ten year everybody not getting their tv through a service like ours. >> i assume millennials are your target audience. you first offered at universities, so you're hoping to capture some of those students as they move away and

start first-time jobs, but what about everybody else that's not a millennial is this a hard sell? >> i think millennials are definitely key, mainly because as an age group, as a demographic, they are leading a seed change in howtelevision i consumed they are cutting the cord and never signing up for tv in far, far higher numbers just to give you a sense, people 25 and younger are watching less than half the traditional tv that they were watching just five years ago, so in another five years, they'll watch zero it's actually increasing the rate, so we'll be less in five years, but we do feel philo has broad appeal, even beyond millennials, where you can watch it on any device you have, you can watch it wherever you are, it's fairly priced, no contract, it's a good value, you know, there's great functionality, you can record as much as you want and then watch the recordings, you know, on any device wherever

you are. i think it's a better way to watch tv for everybody >> consumers will, obviously, decide over time while we have you, andrew, it's been such a crazy few days talking about all these existential questions about social media and the web you recently penned an op-ed in the times and talked about how the openness of the web allowed facebook to exist in the first place. what are your thoughts now as net neutrality has come to a key decision >> you know, i think this is a critical issue, and i think that the fcc is really ignoring a lot of what the majority of people in this country think is the correct decision, which is net neutrality is a really important and vital part of what keeps the internet a vibrant place to, you know, for innovation and to discover content and to do all the things that we do on the internet, like watch philo, and

i think that rolling back this protection is a real threat to that, and, you know, as a company that is potentially impacted by this, but also as, you know, a consumer of the internet and someone who gets a huge amount of value from that, you know, we want to do everything we can, i want to do everything i can to push back against these changes. >> obviously, it's an emotional issue for a lot of people. is your argument that the innovation that's possible now on the web is not possible, say, on cable television, where we do have, in fact, tiered pricing? >> well, i think that, you know, the web enables innovation in a huge number of areas you just look at sort of all of the companies that have been created because of what the internet allows, the freedom of being able to access consumers and deliver new products and services, you know, the barriers to doing that have come down so

far that really anyone with a world-changing idea, you know, can go and make that happen. we're looking at a world without net neutrality protections, where that may be much less the case, where isps, cable companies, and telecoms that control access to people's homes through the internet can sort of pick and choose the winners and losers and that seems like a real problem. >> yeah. finally, we had chamath on this morning, talked a lot about the facebook model, the degree to which he believes the truth is now vulnerable to massaging because of the profit motive in that company take a listen. >> the reality is now, i can take money and use that through all these social media systems that exist to hundreds of millions of people and convince all of joe's friends and everybody like him of my opinion in very subtle and small ways, and he can do the same to me

we can do that about vaccines. we can do that about gay rights, about bathroom laws, about roy moore. and so i think the question we have to ask ourselves is, how do we live in a world where this is now possible >> facebook did release a statement responding to chamath, they say in part chamath has not been at facebook for over six years, when he was at facebook we were focused on building new social media experiences and growing facebook around the world. facebook was a different company back then and as we've grown we've realized how our responsibilities have grown, too. we take our role very seriously and are working hard to improve. how current do you think, andrew, chamath's criticisms are? >> well, look. i mean, advertising is nothing new. like chamath, i also have not been at facebook full time for a long time, but, you know, you were talking earlier on the program about the dna of the company, and i can say that from my time there and the very early days, you know, i saw a group of people that to a person was really deeply and completely

focused on how they could build a product and a service that really provided value in people's lives, something they cared about, and, you know, really cherished and i think that we're lucky that, you know, the group of people that runs facebook who are, many of which still there today, have that focus. and, you know, that's kind of what i take from my experience >> andrew, so good to have you we're going to watch philo closely. andrew mccollum joining us talking facebook, television, and a lot more live shot of alabama this morning. you know it's special election day and a once this cameraman gets his bearings, we expect to see senate candidate roy moore arriving by horseback to the polls. of course, the polls themselves have been all over the place and there's hardly anyone who is willing to make an educated guess on whatthe results will be tonight >> yeah. that is a tough one to handicap. the cameraman looked to be on

horseback, too >> gopro shot? >> maybe the horse had the camera, i don't know >> there we go >> okay. >> there he is i think. >> there's a different shot. i think we were told the horse he's riding is named sassy and there he goes. going to vote there in alabama >> i think the interior secretary also did a similar photo op in one of his early days in washington, first day reporting to interior, arrived on horseback it's becoming a bit of a thing >> it is with this race in alabama, where the optics have been so odd to begin with, riding in on a horse, who knows, but roy moore, we could be sure of, will be roy moore. moving on. following bitcoin, you may notice the price varies dramatically, depending what exchange you're looking at bob pisani making a sharp left turn is here to explain. bob? >> we never used to care, but

now we have a futures market it's starting to attract attention. makes a lot of people crazy the price difference can be pretty significant. so take a look for example this morning bitcoin was trading at notably different prices, even on the larger exchanges, so kraken, $17,212, gdax $17,150 can be as different as 2% on the larger exchanges what's going on here several issues first there's liquidity. volumes can run into thousands of bitcoins a day. some of the smaller ones, however, may do a few dozen bitcoins that can lead to significant price differences. second, no standard agreed upon way to price bitcoin that's kind of an issue. third and most importantly, you have an arbitrage issue here you need to own bitcoin in cash at the exchanges, so, for example, if you want to buy bit stamp and sell coin base, you

have to have dollars at bit stamp and coins at coin base you need both of them, collateral to make the moves quickly, because if you don't have collateral and have to move, for example, money across the exchanges, that could take a lot of time and the art could be lost finally the infrastructure issue. no management tools allow you to execute across multiple exchanges. this is going to be one of the big issues the challenge is for larger companies to build out an infrastructure system. that's going to be, i think, something you're going to see in the next year or two, and hopefully this issue will go away a bit >> looks like a good problem to have when the price is rising quickly. if we ever get to a point where the price is falling quickly, hypothetically should it happen, oh, boy. >> here, new york stock exchange, guys trade stuff in london and they are back and forth with pennies nothing going 2, 3, 4%

these guys will step in immediately and arbitrage that away, and they should, because it's easy for them to do that. it's not easy here >> caveat for sure when you are dealing with bitcoin bob, thanks. when we come back, spacex has the latest launch, but tomorrow the company could go where no space company has gone before launching at a recycled rocket not exactly recycled, but being used again, on a journey to the international space station. live in cape canaveral when "squawk alley" returns first, rick santelli, what are you watching today >> you know, i'm watching all the various markets moving in lieu of tomorrow's rate increase that's perceived to be happening around 2:15 eastern, but we're also looking at rubberband see the way that one broke we're going to talk about that after the break.

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we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. i'm scott walker coming up top of the hour on "halftime report" today. go big or go home. why betting on blue chip stocks might be the best bet for your money. plus, which of the best video game stocks have the most upside, and a major new development in the first in, first out fight we've been telling you about. the senator that just spoke out and what it means for every investor update top of the hour on "halftime report." carl, see you in about ten minutes or so. >> see you in a minute in the meantime, the santelli exchange. good morning, rick >> good morning, carl.

here's a chart i want you to look at. this is a ten-year chart of ten-year note yields, minus ten-year bund yields you see, first of all, that the high was around december of '16 around 235 basis points, but we're coming back hard as a matter of fact, around 210 right now, and if you look at the ten year specifically, we're now trading slightly over a 240 bund yield, they are gravitating towards 40 basis points. it's called the mean reversing trade and historically speaking, if you do enough of these, you usually make money mean reversion quite simply means whatever you're looking at, particularly on the spread relationship, that relationship gets to a certain point on its wide, then it comes back in. that it is constantly this rubberband effect. traders acknowledge sometimes it snaps in tight and sometimes it breaks the reason i'm talking about

this bund trade is quite simple. that's the trade that's been going on of late, it's been the wrong way. most traders have been selling bunds expecting the rate to go higher and buying treasuries expecting the rate to go lower, looking for that spread to get smaller, to get closer to 20 not that long ago we were hovering around 1660 basis points, but it hasn't worked out that way as a matter of fact, right now the way it's heading, the reason i'm alerting you viewers to this is because we're about ready to get on extremes of both markets. should we start to trade above 245 basis points or 2 had a yield on tens or much below 28 to 29 basis points on ten-year bunds? you're going to see a lot of position moving that could make that go even wider, and it's a bid trade in front of tomorrow's fed meeting. as a matter of fact, if you look in front of all the major meetings that traders thought would result in a quarter point increase, you'll see what's going on with rates as they

creep up is kind of normal but in the end what we really want to pay attention to is the intermarket on the u.s. treasury curve. nine basis points separates 10s and 7s 14 basis points separates 14 year from 5 year and you may say i want 10s to 2s and 30s to 5s that's my samele what i look at and pay closest attention to but after tomorrow's rate hike one of these inner curves is going to invert and will be a huge talking point leading to more awareness on the flat nick curve and what it may mean courtney reagan, back to you. >> thank you very much, rick santelli, appreciate it. always a good lesson from you. as we head to break, don't miss hedge fund manager stanley interest druckenmiller

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talking point leading to more this

spacex is on the verge of making aerospace history they had to scrap a launch today, but tomorrow they plan to send a reusable rocket into space. morgan brennan joins us from cape canaveral hey, morgan. >> reporter: hey, jon, that's right. spacex is hoping to make history here on florida's space coast by launching a recycled rocket for nasa, but it's going to have to wait a bit longer to do that after pushing back the falcon 9

launch late last night it's now hoping to conduct this mission tomorrow, about 24 hours from now spacex saying it needs to, quote, allow for additional time for pre-launch ground systems checks the falcon 9 or really the main engine, the first stage booster previously flew in june and will carry an unmanned dragon capsule filled with experiments and supplies that will be making its second trip to the international space station. now, this launch will take place from cape canaveral's launchpad 40 which we saw firsthand yesterday and which is being used for the first time since a fiery falcon 9 explosion in september of 2016 that caused extensive damage to that pad and prompted a $50 million investment by spacex but overall this mission, which is spacex's 13th to resupply iss for nasa it's being very closely watched. this is the first time the government has done something like this with a commercial company. it's adding validation to

spacex's reusability model, but speaking as well to the fact that as we've heard from the nashville officials here and in light of president trump signing a directive just yesterday to send humans or americans to the moon and mars future space exploration hinges on the ability to reuse hardware, to drive down costs, and that is really going to take help from the private sector to do it. spacex has been on the forefront, and, guys, this is really a big reason why this is a company that's now valued at $21.5 billion, making it one of the most valuable private companies in the world back over to you. >> we can't wait to see the results of what happens where you are, what a great assignment, morgan morgan brennan at cape canaveral this morning as we go to break. check out shares of financials on the s&p on pace to close once again at the highest levels since october of '07 speaking of which, the dow is up 131. "squawk alley" is back after this

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not too many companies in the world can even scale to that type of volume. who knew a tiny sensor could help keep the food chain safe? food has to be fresh. it's that simple. obviously markets are doing pretty well today. dow up is 34 did get a all-time high on the s&p at 2667. ppi ran a little hot today so we're watching the ten-year cross 2.40 for the first time in a while and inflation remains a

big mystery going into '18. >> that's the macro picture. my cr micro, take a look at stocks tesla up 2%, 10% the past week having a rough go up until then. >> you know, we had david berman on on "squawk on the street. some of the retail names beaten down, footlocker and under armour, higher today but down significantly on the year. >> thanks for being here. >> thanks for having me. >> let's get to the judge and "the half. and welcome to "the halftime report." i'm scott wapner our top today, doubling down on the dow and betting on whether blue chips is the best strategy. with us, josh brown, stephanie rink, the brothers najarian are here we begin with the markets today and what's shaping up to be a big toward for the dow jones industrial average pushing yet towards another new high several stocks giving that index a lift boeing with a buyback an