tv Squawk on the Street CNBC October 17, 2018 9:00am-11:00am EDT
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all right everybody, let's get a final check on the markets. the futures, a big update yesterday. dow futures indicated down by 124 points and s&p is up by 4 and nasdaq is down by 7. make sure you join us tomorrow "squawk on the street" begins right now. good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer and david faber, the new york stock exchange the coming off that bounce, the best day of stocks for seven months ibm is a piece of that as revenue is going back to falling. europe is not picking up on yesterday's gains either and watch bonds and currencies, we are waiting for the potential
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report from treasury this afternoon. we'll begin with wall street trading, dow sets for another triple digit drop. the nasdaq is getting a boost from the netflix's blow out quarter. this is after reporting strong cannabis is fully legal in canada but do not expect a quick end to the pot stock the ceo of tilray is going to join us on cnbc this hour. the dow posted the 548 gain. the last time every stock in the industrial, transport and utilities finished higher was on the monday, the 2016 elections the three have yet to recover from last week still down more than 2% since a week ago and essentially recovering half
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between the all time highs than the recent decline >> yesterday was the fabulous day for the bulls. today you got a couple of individual reports that are worrisome. housing and loans are two areas that are forward looking against that you got a great number from csx we asked munoz, great number with united. i did love netflix, it had nothing to do with the economy it is a worldwide story. miracle worker in the sense he told you last time listen, i don't necessarily forecast right. he forecast wrong this time again, too except this time he got the the highs. >> we'll talk more about that. also, burlington, a berkshire company having blow out number
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stronger economy as they have seen >> rear-view mirror. >> rear view >> okay, i know where you are going. are you trying to ambush me? >> good effort though. >> man, confederacy one over their -- the chemicals are really good and automotive is a price. the biggest surprise line is kohl's they are killing it. csx was terrific union pacifica will be good next week >> yes >> david, it is a mix picture. when you look at the downgrades, it is chilling >> you are referring to hg >> yes, don't forget geld. you probably did not look at geld >> i am going to now
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we have some parts of the economy that are just on fire and other parts would roll over if you raise rates >> we are well aware of it i wonder mr. powell of real world experience and not in academics and you said positive things about that. real world experience. >> i am totally wrong. what do you want why don't you beat me? >> i am not saying you are totally wrong. >> give me a miranda warning >> nine-year recovery with real rates barely positive and you don't want to see the punch bowl removed. >> all i am saying these numbers are good and i would like to see if they can continue the comerical loan figure, it is a big bank when i saw the csx, david is
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going to come in like gang buster >> expense is down too, helps. >> they are really so much better than it used to be. >> and some of these price crisis are sticking. >> the trucking business are so tight. >> you speak to the rails whether these guys are burlington or u.p union pacific are going to buy a lot of stocks. most of the numbers are very strong they did not backup my view, okay there i am betting there will be a lot of numbers that'll backup my view and worth waiting if you are jerome powell. a thoughtful guy that would never miss the show and he would never say these things about women. >> do you think he watches our show >> he's clued. his wife watches the show. >> housing and mortgage apps,
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we'll get to it in a second. >> that's what i am talking about. the mortgage application number are so abysmal that i can't believe you're not focused on the 4% we have seen the best of home depot. >> you are talking about the downgrade from csx >> and the cycle, the only thing that defends his world is the lampert search number. it is mix, david janet yellen told us when it is mix, you got to wait >> okay. >> you literally this week said i am worried about the economy over heating >> i over think these. the president made a serious mistake. the president does not watch and i can say whatever i want. jay powell is fabulous janet yellen is dated dependence what are you a fed governor? >> you know what the good news
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is we'll be here in six months and a year and hopefully after that and we can discuss who is right or wrong >> most americans don't have contracts. how about the fact that americans making a dollar extra for a month. we got to stop that, don't we? >> they're making 79 cents more an hour. it is hard to find workers in some places. >> it is a consequence of full employment we want everybody to make a little extra money that was the job cut that was what the tax cut is about. ibm tax. >> netflix is big up in the premarket. the company adds 7 million subs in the quarter and well above forecast and revenues are in line guidance for the current corner. hastings talked about the growth and net ads. >> we are getting better on the forecasting and evolution to pay net ads.
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if you look at the paid net ads growth, you can see it is remarkicalremark bli steady you can see the noise that the free trials added into the page which could see the total creates. by focusing on forward on paid, we'll be accurate and focus on the fundamentals >> all right, interesting. they forecast 5 million back in july, they beat that handedly. content expenses, total sub count of 137 and although key bank is the sole downgrade today. >> what was that about what a splash that person made, great. here is the thing i like about netflix.n netflix. netflix is adding a number of subscribers per quarter that's unbeliev unbelievable reed hastings is such a humble man. now, we nail this with the
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interview with our colleague with barry dillers.n netflix is amazon and they can spend all they want and there is no walmart the family is endorsing and trying to catch amazon there is no one who's trying to catch netflix. i love it. we got to spend billions and then like why. well because "orange is the new black" is great and he likes luke it is really interesting what he talks about. he talks about how program ming and individual countries he's got programming all over the world. i want to see new mexican programs millennials don't mind titles. plus, they can see >> that brings up another point. asp is on an an ynual bases
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people will pay for the basics >> yes, they do. they'll get hooked they did celebrate subscription here in the u.s. as well >> was that amazing? >> it is apart of the bundling bundling netflix into the package. >> that's secular. >> it is helping them in terms of getting pass anything if you had to sign up anything. apparently they are benefiting from that and they talk abouts the opportunity and places like india and they don't want to get ahead of themselves. >> they had two indian programs that were killer and amazing >> yeah. everybody uses the word super because that's what you do in silicon valley it is super exciting and it is super, super >> first they push me stuff on what i like. and then i go to the site and it is like okay, reed, get out of my mind. yes, i want to watch the fall, i did not know i want to watch the
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fall he has real artificial intelligence and not bonus intelligence >> you mentioned diller said yesterday don't try competing with these guys. what does it say to stanky and igre you have to try. >> disney got to compete >> disney can make the playoffs. >> yeah. >> hbo can't compete, why not? they do and they will and they are. >> att >> hbo >> okay. >> what about this though to the point of competition, they dependent on netflix for quite so some time and others producing the show that people can buy it is getting complicated
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because of con flick atlant cont they want to sale. they got to ramp up their studi which they have. producing for disney they did say they'll spend another billion if they have to. they do have much better programming worldwide than disney the worldwide program is extraordinary. they pick the best of the best they have a lot more volume. disney is going to have stars and real, you know -- >> franchises. >> i think disney is going to kill it. the sign up for netflix, and espn plus bundle is very good. tu you can sneak sports with your wife never knowing she's watching some women show on netflix >> they could program. they got to get the same
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producer of that programming to do it for them when they're getting out bid by netflix for everything >> take the cohen brothers stuff. they rather work for much money for reed hastings. >> people that want to be seen, they know to come here >> i know a number of people produce for netflix because they don't tell you anything. ere in t e >> you are in the dark until the day they tell you have been renewed or anything. >> is there anything you are happy about? >> the jets won. >> that was like a year ago. >> no, that was sunday >> i can't bare to look at you being so negative. >> the knicks have not lost the game yet >> wait, your negative and he's positive >> i am positive you are turning it around on me. >> you are trying to get lock smith three. >> i am saying the economy is really strong and you are like whoo, i am so scared
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>> i am not here to help you you are on your own jimmy, you can help it. >> oh my god, housing! >> when we come back >> are you finish? >> yeah, i am done here ace live shot of a store in st. john's, canada is making history today, recreational becoming legal across the border tilray seeing their stock surge, we'll talk to brendan kennedy, he'll join us at this hour coming up the best day since march. dow and futures are down 128 back in a moment see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool?
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. throee, two, one >> that's history being made north of the border, canada is the largest country to legalize the recreational use of marijuana. cannabis stock as you know surging all year led by tilray, two months gain of 390%. later this hour, we'll talk to ceo brendan kennedy about that we are learning more of the number of canadians who used last year and how much they used
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and what they paid >> it is very many estimations what the black market was and we want to know how much recreational can be. i spent a lot of time with canopy this week it is clear to me that it is going to be about disruption worldwide of beverages, maybe it is alcohol or not. constellation is putting 4 billion with canopy. >> cannabis is n-- it is a good business but it needs to be in the u.s. and all over europe and it is not there yet. >> you want federal legalization >> if you want to own the stock, you have to believe there will be federal deregulation within the next five years so it is not going to happen now. there is as farmville that if it passes in november will allow more cbd, this is about thc.
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this is about the stuff that does not put you to sleep. it is the stuff that gives you the buzz that's what it is about. the buzz and edibles and the buzz coffee and the mix drinks and bars that give you a buzz and the medical gigantic >> how long to prove out the valuations how long do the market wait until we see the real numbers and therefore dictating. >> let's say the disruption is 500 billion. you have 35 billion in market cap canada that's not that much when we speak to tilray, the only one that you can really have what's called a legitimate borrow that you can short is cano canopy all the rest of them is heavily shortage because people believe it is going to burst and prices are going to come down as soon as this thing happen, you can blow it out. we'll look at it a few weeks from now not everybody is going to make a fortune in canada.
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that's what certainly what happens in oregon. >> good to know. fascinating story, we'll talking kennedy in a few minutes let's get to rick santelli in chicago. >> good morning carl, once again i don't want to paint as picture that treasury are not a vibrant trade. they are they are not covering a lot of ground if you look at today at 10-yr, here we are, 315 and 316 those are the two yield closes that we had. opening up to may 1st, the most important aspect of this market, clear way all the clutter, the fact that we took out a very key level, 311 we have come down and intraday after all these sessions and clearing the zone, we can't retest the break out point and we are in a tight range. that seems to be the profile of
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rates going higher, just a matter of when if you look at a may 1st chart, you should be staring at and you will see on the left side of what i am talking about and the small area after it shot up. if you look at tens minus two is very interesting everybody is nervous of flatten and secretary mnuchin says on cnbc the steepening has been very nice but it is not a whole lot it it seems to be sticking and especially post rate hike. finally the dollar index, i can't stress this enough the dollar and interest rate differentials are very important especially of the wide divergence of interest rates of the economy. we are up solid of 3/8 of a percent. that's something you ought to
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pay attention to carl, jim, david, back to you. >> thank you, rick santelli. when we come back, cramer's "mad dash" and we'll count down to the opening bell ckn mohetrt"k on t see ba ia ment s more than just investment advice. from insurance to savings to retirement, it takes someone with experience and knowledge who can help me build a complete plan. brian, my certified financial planner™ professional, is committed to working in my best interest. i call it my "comfortable future plan," and it's all possible with a cfp® professional. find your certified financial planner™ professional at letsmakeaplan.org.
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ibm is the future after the bell it is going to be down, strategic imperative is what they want to talk about. giver us your analysis on the quarter. there is a new name, her name is lisa ellis and she predicted of everything that's happening we are talking about a slow down which is cognitive they're not getting the kind of business that she really wants you should go to amazon web service and you should use probably going in and using vm ware to get on there. they do their own. a lot of people feel they steer towards that people don't want david, it is not coming together >> it is not >> that's a big statement on your part. >> it was. i didn't want to see the strategic imperative slow. >> they have more work to do >> revenue is 39.5 million up 11% for currencyof these
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strategic. >> i can tell you, a third of the company is about 15%less market cancellation dropped by a third. david, it is not coming together yet but lisa ellis did she nailed it. she had a sale, i didn't believer it. she's right. >> we'll talk abouibt m when we get to the opening bell right here on "squawk on the street.
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you are watching cnbc "squawk on the street," opening bell is opening in a minute, very busy on wednesday 90% which you talk about the key metric that we had and we have not done that for a while. thoo it it was a strong day yesterday from the beginning to adobe and netflix and showed you where people want to go. lampert search is heavy. very strong quarter. >> best day for adobe and semis
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of some near term release despite some negative notes of what we saw. >> they are inflected, one is money. now it is coming back 3% although of course he shielded me because he has been my guest for quarter after quarter and he's not coming on, that was my take away when i was getting my makeup on. he's coming on the 11th which was hurtful. >> you will live >> get some people >> there is the s&p at the big board. it is madison square garden highlighting between the big fight against rocky fielding and
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marvel >> stocks have come down very big, they made a good acquisition. they got a top flight picked by starbucks. >> speaking of msg by the way, some people don't realize that company is splitting into the sports teams, the rangers and the knicks and the soccer teams and the venues, msg, radio city. they're rolling out this fear, msg fear they'll own 34% of the team of that company and the team will actually be here own separate publicly traded. >> are you betting >> that's what's happening in the second quarter >> don't you want to short those teams? > >> those are all new york teams. the rangers have not been too bad. >> now they have legalize gambling >> it is interesting, too.
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>> you can hedge that. >> you could >> jim, i want to ask you about the banks. they have been called the one blemish on the other wise stellar day that we had the other day and goldman is down this morning as of jpm is this about the market looking at loan numbers? >> it is the mortgage business will be down 10% if rates keep ongoing higher this is a situation now -- you want rates up a certain amount and not too far. you want loan to continue to go up i got first verizon tonight and the number is okay that's the hottest area the country tends to see i would like to see blow out number the comerica number were terrible the pnc numbers were weak. there are conundrum are bad. these are all things that i am
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saying let's take a second and not be like the president who's bashing the fed unfair not be like the fed putting their head in the sand, we are going to go back and we like what vernacki did. you need to wait okay maybe we could do september. >> he took us into a recession because of the lock stuff and not because of the huge securitization of horrible loans and the failure of the fixed income markets and the turning offensive as a result? >> i would and if i had a podium in august of 2017, i would have gone nuts and say they no nothing and out of touch >> you did do that >> they thought it was ha
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hysterically >> is icahn wrong? or dimon is wrong when they say we are going four plus >> they're all wrong i know jp morgan told you a pretty good story. there is good and bad. i think if it was all bad then i would say do don't the december hooi hike and jolts. >> when you say the economy is not that strong and we see a 7 million jolts number, well, people get confused. >> well, i know that you have to do the regional banks which will be good but they're not that good why do i say first verizon, soft loan growth, when you ask people where you should move, they said florida but it is over done and
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now they're saying nashville and memphis. that area should be the fastest growing. it is not working. i just see enough that cause me again, i am not saying we are going to a recession, i am say thag ing i wish autos are better and i wish we would find out housing was not going off a clip and 5% mortgage it does seem like it is. hence the home depot which i know -- there is great remodel but stuff is not moving. what i am saying is stuff is not moving without cutting price that's what the fed wanted it is happening. i am saying that the fed won in 2006 but did not know. the fed is winning right now. and it does not seem to be aware that it has won.
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what >> who were you at warwith for a while? >> it was a war between the states and it ended. you know i don't blink at that stuff. >> i know you are. >> don't chief me. >> i am chiefing you, sparky >> we have not done airlines, guys >> ual raises their guide for the third time this year >> they miss by a penny. >> we are in an extremely full flights so you got to put that stuff right above or we have to take it off. it is an amazing quarter >> we were in san francisco and the third time oscar is running a better airline. where did he learn to run a better airline from? when we was running csx. i see upgrades of american and united can they recapture the price of oil and continental ken?
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>> right you should be hammering me on contine continental. >> why >> because that was the one that did not fit my thesis at all >> some of the hedging strategies have paid off big time >> yes >> these companies are buying baa back stocks and they're growing. these are not the right brothers >> no, it is not >> it is not pan am. >> remember pan am and twa >> it is not any of those. >> no. it is not. >> which was the one that went bankrupt >> remember texas air? >> i remember trump air also >> remember that >> briefly >> guys, i want to talk about campbell, it is down 2.5%. it is a story that we have been watching closely as the third point seeks to replace the entire board of director at campbell as i pointed out a number of time reporting on this he hope to turn one or more of
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the durante family members who of course together own as much as 41% of the stock. this morning in a press release, campbe campbell soup company announces that those four shareholders descendants of john durante, the inventor of condensed soup notified the board that they intend to vote of the current slate of the directors of campbell we are talking about -- they represent about 41% of the shares if you are doing the math and you need 50% to replace the directors and it is of those shares voted and 41% voted against. as we have been saying for quite some time. it is an uphill battle for mr.
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lobe for at the very least to replace the director we'll see what mr. lobe says i did put in a call to him, he has not returned it. i did want to point it out and it is having an impact on campbell shares. >> i find that's a mediocre board and if they don't sell that company, i patrick severrel more quarters of the same. they have a stretch balance sheet. you know that's from haiti i am not surprised >> they're very ill advised. i am not surprise one bit that the family is sticking by. that has been their gain it has been their gain >> remember when senator warren says what's wrong with mediocrity they're endorsing me
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did you see the ceo of may 17 is like hey, whatever this company is just in array. >> they don't have a ceo and they are searching for one mr. lobe has been focusing on the execution of selling the company immediately and they have gone back and forth lobe wants to sell the company but offered no new ideas 41% is tough to go in and win. >> not to mention they keep on showing up on the list of companies taking leverage to finance a lot of these >> if you look -- now they're trying to dismantle some of the actions bike the bull house. >> they're selling international and fresh. >> they make a lot of mistakes in order to be able to grow. i think they vastly over paid for the snack company. >> yeah. >> speaking of leverage company, our own parent company, not to be a homer here has had a nice
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rebound, comcast i am talking about. since the announcement of the sky deal, of course prevailing over disney slash fox in that bidding war and the stock got vlanned arou slapped around heavily in the days that followed but rebound nicely in the last couple of weeks. >> it is the trend that i remember you covered it. att went down 7% and it was off the races. looks like it could be the same. >> a couple of analysts. bfa resume with the buy. $50 target >> it is right it whhas been right you need to get out of the conundrum that we have been stuck with which is the kind of -- they keep on doing well on the x 1 which is a great product. >> they're a conductivity company. >> what's the matter with that
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>> they are. >> well, it is true. and the international business is good. not enough and i like to see more sky going to be an important part of it >> people are watching tesla today. musk is going to buy $20 million in stocks. there is legislation that may be introduced that would lift the cap on credits that would be very big phil, i asked phil about why f chevy was not doing that well. that's very, very interesting story to watch now, what's interesting also is you ever say i am going to buy 20 million i want to stock up and pay more. you g et the 20 million in and you tell people but it is making a commitment jamie dimon bought a lot of stocks at a lower price. >> he did? >> we just looked at that, the dimon's purchase he bought in february of '16,
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average of 53. >> there you go. >> i often confuse jamie dimon with elon musk >> you do? >> because they are fortresses those guys >> they are? >> i am not going to >> i am going to leave it alone. >> they have nothing to do with each other whatsoever. >> not one thing i can fiend the agree with each other. >> when we come back, we'll check in with canada with their cannabis and the owner tilray. we'll be back in a minute. this is huntsville, alabama. aka, rocket city, usa. this is a very difficult job. failure is not an option.
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at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. well, recreational marijuana is legal in canada while spring for cannabis stock and including our next guest, tilray it is up 8%. not a bad performance there.
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joining us now, first on cnbc is tilray's ceo, brendan kennedy. we just lost him some trouble in the shot of mr. kennedy. >> we are not drawing the line in between technical difficulty. >> i was going to talk about workday. >> the entire country are already stoned and therefore incapable of broadcasting. >> the first page of the deck on canopy is grandma and stonedma always consider your company to be the best medical company. i know it is recreational today but you have done all work on anyone of all the uses of medical and 9/even in the united states why don't you talk about your breakthrough pioneer work.
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>> thank you for having me today. it is an exciting day in canada and canadians could not be more proud on achieving this mild stone. the eyes are on canada we currently see about 35 country in the world that have legalized medical canadas. i expected to go from 35 to 40 to 50 to 60 over the next two or three years. those countries are using cannabis based medicine as a replacement for prescriptions and painkillers and opioids. after today we expect additional countries in the world we know there will be a third country and there will be a third country some where in the world the next year. >> why don't you give us what your view now at recreational that is the size of the market that could be disrupted by
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cannabis not necessarily how big cannabis will be but how big the total address of the market could be taking away other things and other areas, everything from edibles to drinks to medical >> i think it canda ds can disr industries and that's food and alcohol and beverage primarily and you will see some canavanoid used that's the big fear. that's why you see pharmaceutical companies and alcohol companies investing in the space. >> brendan, canadian medical association putting out a statement calling this an uncontrolled experiment which the profit and producers are pitched against the health of canadians. how much policy push back are
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you hearing at this point? >> you know when we look at canada, canadians are definitely in favor of legalizing cannabis for adult use, most countries in the world that are looking at legalizing for medical use see resounding support for that it is an experiment but it's also the end of a 95-year experiment in prohibition that didn't work out so well. so we're going to see safer products -- >> what didn't work? >> if you look at the united states, you see mass incarceration, you see people using this product but not using a safe product so now canadians will have access to a safe, regulated, tested, branded product that's tax taxed and won't contain c contaminants like so many illicit products do.
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>> mr. kennedy, i have to ask you about the stock price itself given the rarity of seeing a company's market cap go up 800% in a short amount of time. is that a concern of yours do you feel that it's gotten far ahead of itself in terms of the opportunity no h how do you look at it? >> when we were out talking to investors over the last 18 months, the feedback we had from long only blue chip u.s.-based firms was that they wanted the company to go public in the u.s., they wanted the company regulated by the s.e.c., they wanted a company to report in u.s. cap financials so we went down the path of the nasdaq ipo. and while we anticipated significant interest in that ipo and after the ipo, there was a lot more interest than even we had anticipated and it's just a
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sign of how -- this is a real industry, it's a global growth opportunity in a time where there's not a lot of growth and you're seeing a $150 billion to $200 billion transition from prohibition to legalization. i think you'll see a handsful of companies control a significant market share, we think we can be one of those companies and you'll see multiple companies with $100 billion market caps and we hope to be one of those companies and so while we're further and farther along on that growth curve probably faster than we anticipated, clearly investors see that this is an opportunity to invest in a rapidly-growing global industry at a time where there aren't a lot of opportunities like that. >> i want to walk that back a little, brendan, several hundred billion dollar companies right now we know canopy got $4 billion from constellation which is going create a big load
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they have more than 30% of the supply for the dispensaries. but if the whole total adjustment market is just over a billion, how do you arrive at a figure that is far in excess of what these at right now. >> i think the t-mobile market over five years globally is $150 billion to $200 billion. i think you will see a handful of companies dominate part of that industry. i think it looks more like beer than any other industry that i can think of so if three or four companies control $150 billion in terms of market share you can glt get to two or three companies that have a $100 billion market cap just like that alcohol industry. >> one of the big stories about the nascent efforts we've had in
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legalization in this country, namely colorado and other states, has been the unwillingness of the financial sector to back them with instruct it's an all-cash business, heavy on security. is it any different in canada? will it be any different >> it's completely different we use major banks here in canada we closed a convertible bond offering last week using bank of america, merrill lynch and bmo so you're already seeing major u.s. banks enter this industry, you're seeing major canadian banks in this industry so that's not a problem. we've been operating in canada for five years we've never accepted a loony in cash, it's always credit cards so we don't face those problems in canada. >> look, you know i've been a huge supporter of this i've had every one of these companies but i want to go back
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to if there's one company that has a $4 billion war chest, you have a $400 million war chest, some companies don't have a lot of cash at all how can you compete with what is looking like the amazon of cannabis which is canopy >> i have two responses to that. one is with the ipo proceeds and the $450 million convert, we have over $500 million in cash which puts us in a good place. i'm not sure how canopy deploys $4 billion wisely or how constellation deploys $4 billion wisely over the short term i think we're comfortable deploying the cash we have i also think we here in an interesting position where every ceo, every chief strategy officer at every other alcohol company and every other functional food and beverage company and pharmaceutical company is looking at this
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industry, they have to figure out how to respond to constellation so that puts us in a good place in terms of having those conversations. >> so have you been conducted -- $13 billion market cap, which is incredibly large have you been contacted by coca-cola? anheuser-bus anheuser-busch molson altria which one have you been contacted by i know there are many different companies being contracted i'd like for you to at least tell me what industry has approached you and said we want to be your partner. >> as i'm sure you can appreciate, i can't comment on speculation. i can say that we have talked to "fortune" 500 companies from the pharmaceutical industry, fro the alcohol industry, from the functional food and beverage industry, from the cpg industry as well as tobacco industry. those chief strategy officers looking at the industry, they wouldn't be doing their job if they weren't talking to companies like ours.
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>> it took 11 months for constellation to cotton up to canopy what kind of company would you like to cotton up to these are difficult arrangements obviously the cultures are really difficult. >> we've already announced an alliance with a intuition of novartis and we'll expand pharmaceutical agreements into other gee yoog-- geographies ar the world. i do anticipate other conversations with alcohol companies and cpg companies. for us we need to find a company that matches our culture we need to find a company that can match the speed at which this industry, the pace is different from anything i've ever seen where we're seeing -- we'll go from 35 countries to 60 over the next few years so you're seeing a massive market opportunity emerge so whoever we partner with needs to move fast
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as these markets develop. >> well, i have to tell you, this is the day. and i don't mean to rain one bit on the day /know your stock is $13 billion. i don't want people to get hurt. i just can't have people get hurt but you are a leader in this segment and that's brendan kennedy, the president and ceo of ti of tilray, inc very speculative name. >> and thanks for helping people find their way around this space. very cloudy and confusing. >> canopy is the only one that has the war chest right now. >> jim, see you tonight on madd mown we'll ecinitcoerchk wh mmce secretary wilbur ross. we're back in a moment six in the morning.
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and you can cancel most bookings up to 24 hours in advance for a full refund. so you can make your next trip... monumental! read reviews check hotel prices book things to do tripadvisor good wednesday morning welcome back to "squawk on the street." i'm carl quintinilla with morgan brennan and david faber at post 9 of the new york stock exchange dow erasing almost half of the bounce we got yesterday as we pay close attention to earnings. netflix, csx, ibm, ual including al co- what. looks like that volatility is far from over stocks are down after the rally.
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have we hit a market top we'll discuss. plus, the president is getting ready to negotiate new trade deals with partners across the globe. u.s. commerce secretary wilbur ross is going to join us exclusively. and canada legalizes recreational marijuana we'll bring you up to speed on the wild swings, most of them down, of those pot stocks and talk about the future of the industry. first up, markets are cooling off after yesterday's rally. the dow down triple digits last night. billionaire investor david rubinstein joined cnbc's "net net" giving his take on the economy. holding on your assets, the u.s. economy is still a good economy. >> there's no better place in the world to invest in the united states. transparency, rule of law, quality of the exit students so i wouldn't put my money elsewhere, i would just be cautious about borrowing too much or at too high a level and making sure you have a scenario you assume the economy will go
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down and you're ready for. >> it david kelly joins us today, chief global strategist at j.p. morgan asset management and we also have the chief investment officer at wells fargo. good to see you. >> good to be here. >> they're not big in number but it's an increasing number of calls for recession in '19 or '20. >> you can't call right now. what we'll see is a slowdown in growth we can not sustain 3% growth we don't have enough labor force to do it but this is a stable economy. there's a reason why expansion is getting longer and longer so it's hard to knock that two down to a negative number so i can see a slowdown, i cannot see a recession. >> are you a believer in what some are calling this supply-side experiment where the president can allow the economy to run hot enough that productivity rises and inflation remains subdued? >> to some extent. i believe this economy does not generate much inflation.
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we're doing everything we can to generate wage inflations and yet real wages are up 0.5% year over year so this is not an inflationary economy but we've been doing -- easy money has been pushing up asset prices so what i'm more scared about is asset bubbles causing recession rather than inflation. >> and, kirk, just to that point, you note that investors are not as diversified as they think they are and that as the fed tightens its monetary policy maybe investors need to think how they are positioned. lay that argument out for me. >> i think investors are long duration meaning they are long technology stocks which are long duration and long bonds so what you have to worry about is with the fed tightening, the fed is telling everyone to reduce leverage and duration so in both stocks and bonds you need to pull it back and become more neutral. >> even with netflix surging today? strong earnings?
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>> well -- >> it seems we saw this pullback in tech names but it seems like they're roaring back to life already. >> i think that's right but i think the overall market had a multiple adjustment, meaning with higher rates you would expect a lower multiple so the market adjusted to a lower multiple, there are obviously great technology stocks out there but technology had a heck of a run so i think it makes sense given if they rebound to probably pull it back a bit. >> david, in our first hour of the show carl and i have a recurring debate with jim cramer about the fed. do you think the fed is going to be too aggressive given your view of the economy? >> i think the fed is doing the right thing. the biggest threat to the u.s. economy is asset bubbles fed tightening is a vaccine for asset bubbles. it's a necessary thing to do if there is an asset class that cannot stand 0% short-term rates -- because that's what we
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have -- that asset class is by definition overpriced. i think the federal reserve is doing the responsible thing by raising rates. i think three times more through next june and they'll see where they are but it's imperative they do this because if we don't have discipline asset prices will go up and up and you know how that ends, we all know how that ends. >> do you think the minutes give us any clarity on that >> i think the minutes will show there's certainly not -- they're not loco or crazy, they're a prudent conservative bunch remember, the last five times they raised rates, they raised rates at 2.5% per year they're raising rates at 1% per year they're tightening in second gear as opposed to fifth gear. they're doing a good job. >> you're not concerned about a slowdown in the housing economy and/or auto and/or auto as well >> we are in the tenth year of an expansion there is no pent up demand and millennials have a lot of debt, but that's a small part of the
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economy. i'm not too worried. i think overall investment spending looks good and it's about what the economy ask take. so if this economy is going to grow at 2%, we do have to douse down demand to prolong the expansion. >> kirk, do you agree? is there anything out there from a data point stand point that is worrying you right now >> well, i worry about the credit markets, the bond market had a terrific run and you have to be concerned about credit with a flattening yield curve so it will be interesting to watch the spread markets and to see how much the fed tightenings will impact the consumer, things like borrowing but clearly the fed wants to slow the party down and wants everyone to reduce leverage in the system which, to david's point, i think is a great point. and i agree that the fed is doing their job. i think the market would like to see the fed probably slow down
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and not do more than a couple rate rises but having said that, i support what the fed is doing. >> well, we hope to learn more with the minutes, too. and we might get a treasury part on fx. david, kirk, thanks, guys. >> thank you. shares of netflix are soaring after reporting earnings beat the street is gushing over the stock. shares are up 6% julia boorstin joins us with more julia? >> that's right. it's that subscriber growth number sending netflix shares flying higher today. the company added seven million subscribers, two million more than its own projections and says it expects to add 9.4 million subscribers in the fourth quarter that's $1 1.8 million more than expectations the netflix ceo saying he's not concerned about a flood of new rivals. >> there are so many competitors, of course, disney is going to enter, at&t will
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expand, hbo, youtube is on fire growing around the world video gaming like fortnite, there's so many ways to have great entertainment on the screen so no one seems to affect us that much. >> hastings and the content chief dismissed concerns their new rivals will limit their access to content. they say the company's next leg of growth will come from overseas pointing to the massive potential in india. >> we'll go from expanding beyond english into hindi and then into many more languages, more pricing options, more bundling all of those things are possible there's over 300 million mobile phone subscriptions or households, there's almost twice that in mobile phone subscriptions so there's a huge
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mark market. >> not everyone is bullish, the stock was downgraded to se ed d weight. >> we'll see how shares trade throughout the day and we'll have more on netflix later in the hour. when we come back, the president getting ready to negotiate new trade deals with japan. the eu, the uk, wilbur ross will join us exclusively. first, the use of marijuana legal north of the border. deirdre bosa is in newfoundland with a look at what's coming up. deirdre? >> the era of legal pot in canada is officially here from coast to coast retail stores are opening up across the country like this one in st. john's newfoundland, we're live on the ground for the rollout and we'll show you how it works and what it mns feaor the economy and businesses on both sides of the border [ upbeat music ]
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i'm ready to crush ap english. i'm ready to do what no one on my block has done before. forget that. what no one in the world has done before. all i need access, tools, connections. high-speed connections. is the world ready for me? through internet essentials, comcast has connected more than six-million low-income people to low-cost, high-speed internet at home. i'm trying to do some homework here. so they're ready for anything. the president hosting a cabinet meeting in the white house in just over an hour among the topics to be discussed, u.s. trade relations. let's send it over to will marks. he has special guest, u.s. commerce secretary wilbur ross willem, take it away. >> you've announced to congress that you'll be pursuing trade
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agreements with the uk, europe, and japan. as someone here covering brexit, i have to ask you, is the timing intentionally political or is it a coincidence that a couple hours from now european leaders will meet to discuss a proposal that would limit the uk's ability to pursue trade agreements in the future >> well, it's a combination of things we've had exploratory discussions with three parties already, uk as you know can't do a formal discussion until post-brexit so march 29 of next year but the other two, there's no reason they can't and, in fact, i met with the commissioner yesterday. >> i wanted to ask you, usmta announced a break clause in there. i think they called it a poison pill that means if participants in the trilateral agreement
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decide to pursue a trade agreement with a non-market country, as it's termed, probably a reference to china, one could imagine, that the other two parties in the trilateral agreement are able to pull out is that the kind of proviso you would insist nona trade agreement with, let's say, the e you are or japan and do you think those entities would accept that restriction? >> well, the reason we put it in is there's been a lot of dilution of the benefits to the u.s. from the existing free trade agreement with mexico and canada as a result of their making free trade agreements elsewhere. but the real intention is to make sure they don't just do one with a non-market economy without a consultation period, without some accord and with us having the right to withdraw just as they would have the right to withdraw if we did it. >> soon after you announced that
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section 232 investigation into auto imports the eu responded saying it lacked, quote, legitimacy, factual basis, and violates international trade rules. you've not said when that investigation will wrap up you've obviously got a few months where you need to send your findings to the president but would that investigation's results in any way be contingent on how trade talks progress with the eu with japan >> the president announced earlier on that he would not do any new 232 tariff impositions on the eu as long as talks were going in a reasonably good manner so that admonition still holds place. >> secretary ross, i'd like to hand you over to my u.s. colleagues who have some more questions for you. >> oh, fun. >> it's david faber. i would love to change the conversation for a second to china. you know your way as well as anybody around deals and you
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know it's a focus of moyne there is a concern that the antitrust authorities in china are going to use their ability to not approve deals as another weapon in this ongoing war between our countries specific to approval of united technologies acquisition of rockwell-collins or even disney's acquisition of those fox assets do you have a sense for whether that's a possibility or a view on how those deals are going to fare with the chinese regulators as they await approval >> well, i don't think it's appropriate for me to comment on acquisitions that are pending before another country's regulatory authorities i was surprised when the chinese vetoed the qualcomm acquisition of nxp because that had been approved by quite a few other countries and china was the only one who turned it down
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now the chinese say that was not related to trade disputes but you never know all i know is everybody else approved it and they turned it down >> and specific to china overall and where things stand in terms of the possibility of continued negotiations, i'm seeing something on the wires just now from larry kudlow, the economic adviser, saying china hasn't responded yet to u.s. requests over trade and talks is that your understanding as well is there a continued impasse between the two countries about future talks >> i don't know that i would call it a continued impasse. we are where we are and in any negotiation there are ups and downes, there are hiatuses and there are much more active periods. so it appears as though we may be in something of a hiatus now. >> it's carl, mr. secretary,
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when does that change? when does the pace of negotiations speed up again? i assume you think this will have to wait to get through the midterms is g20 going to be the next possible meeting of any significance or scope? >> well meetings of world leaders at the g20 never get into huge amounts of detail. those are meetings that are designed to be broad policy statements and then there are the little pull-asides at the perimeters of the big session and sometimes there's a bit of discussion there but generally those are an hour or less in duration and you can't do a multithousand page trade agreement in an hour. >> secretary ross, this is morgan brennan i want to shift gears again and ask you about another piece of news that's been coming out today. there's the $15 billion contract
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that's being competed over by general electric and siemens in terms of power generation in iraq an ft report suggesting ge may end up with the deal because of intense pressure from the trump administration for it to go that w way. is that something playing out in iraq or other countries in terms of some of the deals u.s. companies are bidding for? >> well, wherever there's a large transaction that involves competitors in a couple of different countries, the sponsoring nations normally do what we called a acall advocacy. so that's nothing surprising to hear >> our relationship with saudi arabia, something you also know
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well, how important are arms sales to that country given they seem to be wrapped up in what are current talks with them about the apparent murder of mr. khashoggi? >> well i'm not going to get out ahead of the rest of the u.s. government on the saudi topic. they are a substantial purchaser of arms. as you know, the president sent secretary pompeo over there to learn more about it. let's just see how it plays out. >> willem, we'll send it back over to you now. >> u.s. arms production, it's about 20% of u.s. arms exports but that's a relatively small fraction of u.s. defense industry productions since so much of that is sold
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domestically my question is, is it fair to say that the sustaining of defense industry jobs in the u.s. is more of a priority for this administration than the promotion and protection of human rights overseas? >> i don't think that's reasonable to say. you saw the lengths to which the president went to get the three hostages back from north korea you see the lengths to which he went to get the pastor back. those are big achievements and in contrast to the prior administration, we didn't pay ransom it was done strictly by negotiation but we accomplished the mission. >> a lot of people have mocked president obama for setting redlines when it came to syria you've got saudi arabia being responsible for -- largely responsible for a blockade in yemen that's left millions of people starving, could lead to what the u.n. warns is the worst famine in a century. that's been with u.s. military support. the state department has recertified their bombing runs that they've acknowledged have
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killed dozens of civilians, including children they're now accused of the murder of a "washington post" columnist in a nato allied country. what are the red lines for the trump administration that would change the calculus on that relationship with riyadh >> well as to the unfortunate apparent demise of the "washington post" reporter, that is a matter under investigation so we can't pre-judge what the outcome of that will be. but the president's not so much in the habit of drawing red lines as he is of just taking action when the situation warrants it. >> mr. secretary, thank you for your time. i'll hand it back to you guys in the u.s. now >> and willem, we appreciate you bringing it to us. our thanks to commerce secretary wilbur ross and correspondent willem marks. as we head to break, looking at where the major averages stand right now, the dow is down 213 points, led lower by ibm
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getting news out of washington today, let's get to eamon javers outside the white house. good morning, eamon. >> good morning. the white house says it will begin the process in switzerland today for the united states to withdraw from the universal postal union that's the global organization that regulates postal prices around the world the administration says it's particularly frustrated by china and a number of other countries which are taking advantage, it says, of cut rate prices for shipping into the united states, subsidized shipping into the united states which they say disadvantages american producers of small goods these are small packages tha they're talking about. the u.s. side is worried here that u.s. exporters are being harmed and u.s. importers are being benefitted they would like to change that calculus they say this is an economic distortion by the universal postal union but the caution here is that this is a year-long process so they're filing the official notice in switzerland today. there's going to be an ongoing
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negotiation process about all of this, the administration says it's open to changing rates and negotiating with the upu if they can affect that over the next year, otherwise the united states is simply going to pull out from that organization and set its own rules on shipping. the whole goal, they say, is to benefit u.s. manufacturers also they say there is a drug abuse component to this. they're concerned about feintanl and other opioids being shipped in small packages. they say this will go some way to addressing that abuse as well, carl. >> eamon, thank you for that we'll hear from the president in the next hour, a cabinet meeting and other things on the docket so we'll see how much we can dip into. >> the drug piece of that is very important and worth noting that the u.s. postal service just proposed the biggest rate increases from a percentage standpoint since the early '90s. we're going to stick with transportation this is our etf spotlight. we're looking at transports
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following big-name earnings. the iyt transportation etf trading lower now, down 0.6% this morning as shares have at least earlier this week looked to rebound after what has been a rough month. transports are down more than 6% they're flat for the year. within the etf united airlines soaring as profits were pushed 30% higher despite a surge in fuel costs and that company posting the highest quarterly revenue growth since 2010. on the freight side, csx slipping as volumes grew, prices rose and savings from a big turn around strategy, precision-scheduled railroading 18 months ago which yielded results. csx is up almost 3% so keep in mind this 1.5% move lower might be profit taking i just spoke with csx ceo jim foote and he's bullish
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he says from his vantage point the u.s. economy is going to keep growing into next year, that customers are optimistic about the outlook, that's notable since csx moved so many different types of commodities and consumer goods, also that trade tensions have not, at least from the company standpoint, been an impact, that tariffs on imported steel have been net positive because it's meant more domestic production so raw materials going in and finished product coming out and at the other big area, soybeans, that foote sees it as more of a shift of commodity movements and sourcing more globally, something he says happens regularly anyway they don't ship a lot of soybeans but so far no impact. also the fact that -- and we've seen this with other transportation companies, he says he's not seeing wage pressure, this is a company that's been downsizing but in terms of folks they are hiring, they're not having to put out more bells and whistles to get
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them until the door. >> interesting, expenses down, too, does not suggest costs are out of control but a huge macro read out of csx. let's get to sue herera and get a news update. >> good morning, carl, good morning, everyone. here's what's happening at this hour a plane carrying first lady melania trump had to return to joint base andrews because of a mechanical issue ten minutes into the flight. the first lady was headed to philadelphia for an event. she is still planning to attend that event after changing planes secretary of state mike pompeo meeting in ankara with turkish president erdogan over the disappearance and alleged killing of saudi writer jamal khashoggi. pompeo spoke to reporters earlier in saudi arabia. >> they told me they were going to conduct a thorough, complete and transparent investigation, they made a commitment to hold anyone connected to any wrongdoing that may be found accountable for that, whether they are a senior officer,
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official, they promise accountability. a russian official now says a student attacked a vocational college in crimea, killing 17 other students and leaving more than 40 wounded before killing himself. russia originally reported a gas explosion but then they said an explosive device ripped through the college canteen around lunch time a suspected terrorist attack terrible incident there. that's the news update this hour i'll send it over to dom chu for the eia inventory report good morning, dom. >> good morning, suh we have those numbers out. crude inventories according to u.s. government data grew by 6.49 million barrels and get a build of 6.49 million barrels. analyst expectations were for a build of 900,000 also gasoline inventories, a drawdown of a little over two million barrels. they were forecast to be a rise of 600,000 in the wake of the numbers, oil prices are holding steady.
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they were down but currently down by just around the same amount, you can see there the oil prices off by just about 1.5% at this point back over to you. >> dom, thank you very much. we'll watch that closely. shares of netflix are up, although off of the highs of the session. we'll break down what the streaming giants quarter signal for investors. the president goes after the fed again. former federal reserve vice chairman stanley fischer will join us tomorrow 10:00 a.m. eastern time that's something you don't want to miss. dow do 2 ckn st moment.
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unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. shares of netflix are up very nicely this morning although off the highs of the session, this after reporting a jump in new subscribers with international markets in part driving the bulk of that growth as it has for the last few quarters on last night's earnings call, ceo reed hastings address ted te
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competition in the streaming of video. >> there are so many competitors. disney is going to enter, at&t is going to expand, hbo, youtube is on fire growing around the world. video gaming like fortnite i mean, there's so many ways to have great entertainment on the screen so, you know, we don't focus on any one because no one seems to affect us that much. >> here now is rbc's lead internet analyst mark mahaney who was ranked among wall street's best tech equity analyst according to a 2018 research survey. we didn't need that to tell us you're one of the best, mark. >> thank you good to be here. >> nice to have you in person for a change you love netflix in your notes here, very, very, very -- three veries y verys in describing how good the quarter
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was -- any concerns? >> long term competition concerns you have to be worried about. i think the advantage netflix has is i think they'll kruschev the competition. they'll bury them in content spend. they're spending $13 billion on on te content. at some point there will be a $20 billion cash content spend by netflix nobody can match that and they can do it profitably because every year they're bringing in -- now we're bringing about 24 million new subs a year and that adds up in terms of the amount of revenue. margins are rising and the key thing for the cash flow folks out there is they committed to peak free cash flow burden it will be this year, '18 to '19 and then start coming down that's been the last bastian of the bears argument now it's changed. >> they say the more we spend, the more subscribers we get and you believe that will continue to be the case, even when they get to as much as -- the number is almost hard to imagine. $20 billion? >> well, so you have to work into the math like this is a
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company on track to have 250 million subscribers worldwide. each paying 10 bucks you should expect them to take 50% and apply to content and feed the machine they've been doing it successfully and margins have ramped successfully so unless anybody screws up with magic, a new risk comes in. i just think the distance keeps rising, it's harder for somebody to take on netflix than it was five years ago. >> we do have disney coming on line we have at&t i'm sure you read the key downgrade is about investment efficiency that's not knocking people's socks off. when do these add up >> i think in some ways they're all there on the stock but the question is what will really break it at the end of the day it's always subs and subs and subs so you have an axcceleratinaccelerg
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so you have accelerating sub ads, pricing power and expanding margins. i don't know another place in tech where you can't get that package, maybe amazon. that's about the only other place and that's why the stock works near term but we think it works long term. valuation rise this company can generate 25 bucks in gap earnings the market will put a 20, 30 multiple on that so there's a path to a 600, 750 stock. if you can get this thing down to 300, rounding down 300, it's a double in three years, that's our valuation pitch. >> but if they continue to keep spending more money and you have rates rising, are investors going to be that keen to keep buying the stock >> well, the question may be can they get the debt deals off? they'll need debt financing for a while and interest rates are rising they were asked about it last night, they seemed confident they can still get reasonable terms on debt but that's an unknown. that's the biggest near-term risk on the stock. they do a debt offering and it back fires. >> i don't want to understate the creative power of people in the world but the idea that they'll be spending $20 million,
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amazon i can only imagine will be spending at least half that potentially in that same time frame not to mention disney and everybody else will there be enough good programming to actually support these services >> well, the derivative off this is this should be a great time for content creators you've got three, four mega bidders for content. they're spending more than traditional media companies so if you're a great -- we here in the wrong job. we should be in the content creation business. >> we consider what we do content creation a little bit and maybe more so, who knows but they'll never get into live news or something like that. >> i think it's highly unlikely. sports highly unlikely this is on-demand programming so if it's live it negates the on demand part of it. >> he did talk about whether or not they'd have to diversify years and years from now and didn't really see any major pivots they would have to do a la dvds to streaming a few years ago. >> i'm sure there will be some pivot. this may be five to ten, 15 years out.
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what if we get to group virtual reality in the home friday night. it rea reed is right that he competes for entertainment dollars. so if some great new entertainment experience that gets us to stop watching video and does something interactive, yeah, that's the concern for netflix but that's five to ten years out. >> you mentioned it's all about the subs what's more important? i realize that domestically the numbers are slowing, the growth is slowing but what is more important? continuing to add domestic subscribers or international >> international because now the international sub base is bigger just so we get the numbers right, the international sub adds are accelerating and u.s. sub adds have been in 5.5 million for five straight years. so they've been consistent last quarter they did slow, but for the full year, domestic sub adds will be about the same as last year so we'll end this year with 60 million subs reed hastings a few years ago prophesy it had company could get 60 to 90 million u.s. subs if he knows what he's talking
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about, there should be at least another million subs to come. >> 30 times the $25 number five years snout. >> yea >>. >> yeah, discount it back. >> mark, thank you. >> thanks, david. when we come back, watching the markets. dow down 271 as kudlow, wilbur ross on our air. right now the president on tape saying china is not ready for trade talks. meantime, the green rush big businesses looking to cash in on the pot craze. is the real money in the future of cbd senior economics reporter steve looeiesman will sit down t gary cohn tomorrow at noon you don't want to miss tt. ckn montha yep, td ameritrade's g. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront.
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let's get to the cme group in chicago and get the santelli exchange good morning, rick. >> good morning, carl. i'd like to welcome my guest and let's get right into it. one of the big issues after we saw treasury international capital flows yesterday is with all this growing supply and attention to deficits, rates either have to go higher, supply is going to be an issue, who will buy it? what are your thoughts >> we think there's supply pressure that will push yields higher all else being equal. we have the t-bills that keep rolling. we're adding to the deficit and we're seeing big buyers step out of the market. you've seen the foreign buyers step back. corporations who used to be big buyers aren't buying the same way so i think there's going to be pressure on yields. >> you know, that makes perfect sense. the problem is whether you go
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back and look at graham rudman deficits in the '80s, sometimes markets have counterintuitive moves. there was an awful lot of byington treasury international capital flows, just not the names we're used to so i would phrase it this way will some of that actually end up helping the yield curve i'll tell you why. right now six month bill gets around 240, a year bill gets 256. all things being equal many say what will keep rates going to high is buying by investors but mostly they'll probably buy the short end. will that make long-end rates move higher in tandem with the issues of supply >> yeah. again we need to see growth. one thing that's helped the back end of years is a little global growth concern and stock markets. stock markets went down, we caught a bid to bonds and i think all else being equal people will gravitate towards why not invest in two years, pick up 2.5% you can reallocate your portfolio derisk and still get a decent amount of income. so that's a trend we will see which should push to steeper
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curves >> gotcha. now when it comes to corporates and where they are on the investment grade, triple bs, fo example, we know the likes of the bank of japan and the european central bank have been helping corporate securities globally because they've been purchasing them. but in the end i continue to say what is the juicy rate in better credits like sovereigns and t-bills, aren't corporations going to have an issue trying to move this paper? >> over time they could, people have been concerned about corporate credit risk. when you talk to corporations they're well-managed and understand what they need to be and what we should start seeing now is there's been a lot of talk about deleveraging, a lot of talk about controlling the balance sheet that hasn't turned into action. now that yields are higher, now that there's more competition for the bond money, corporation will deliver on that and you'll see divergence those companies that have great earnings, there will be no
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problems on their credit spreads, they can go tighter on the longer end those who see leverage increasing and don't perform on the earnings side, i think there will be a real separation so you have to be right on your credit picks. not just student body left, student body right you have to be right but as a whole i'm comfortable with credit spread. >> excellent peter, always interesting to get your take on the securities markets. thank you for joining me today "squawk alley" -- excuse me, "squawk on the street" gang, back to you. >> thanks, rick. rick santelli. speaking of, let's send it over to john fort with a look at what's coming up on the always amazing "squawk alley. john >> the man is excited about "squawk alley," can you blame him? take a look at chip stocks, though not faring so well overall as the nasdaq is down 1%. what is doing well, lamb research up 2% after earnings and we have the ceo coming up to ocisigr.why stk hhe that's on "squawk alley.
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tillman fertitta has apparently approached caesars entertainment about the idea of a possible merger this is a source reporting from reuters. the structure of the deal would look like a reverse merger in which caesars would buy his casino operation, tillman fertitta's apollo would remain stakeholders in the combined company. we have reached out to the group for some kind of comment we will let you know as soon as we hear back from them, if we do for now, those caesars shares are up by 5% in morning trade. back over to you >> definitely one to watch in terms of gaining dom chu, thank you the wild swings continuing for cannabis and pot-related stocks. canada backs the second country to legalize recreational use marijuana. joining us is the ceo of charlotte's web holdings, which makes cbd products thanks for joining us today. >> good morning.
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thank you for having me. >> so in terms of canada, we're talking about legalization of recreational use marijuana you're focused on cb deductid ps do you expect this to impact your business and sales? >> that's correct. we are focused on cbd. our product is from cannabis sativa, but that's less than 3% thc. we don't expect impact from the canadian legalization, although it is an implicit validation from voters and a g8 government saying, look, this is the way of the future we're very excited about what we're seeing north of the border >> in terms of those regulations, how do you think -- what do you think about the way canada has approached this, and do you think it could potentially be a template for what we see in terms of broader cannabis regulation here in the u.s. >> absolutely. i do believe that a lot of countries will follow canada's lead canada really took a responsible approach to this, although we
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don't focus heavily on the cannabis sector. we do know that they are really taking a kind of slow and thoughtful approach, initially authorizing some certain forms of products to then roll into other forms. i think that's the right way to do it. >> now, in terms of cbd, as you mentioned, unlike thc it doesn't cause the psychoactive effects just in terms of folks that aren't as familiar with what you do, do you already sell those products here parts of the world >> we do our core focus is on the u.s. market we have plans to expand internationally, first western europe and then later south america and potentially asia the difference between our product and thc is that it doesn't have the intoxicating effect we deliver the health benefits that are associated with cannabis as a plant but don't deliver the intoxicating effect or the stigma or the regulatory
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issues >> so for investors who are trying to read the future of legislation regarding this, in this country, and these ag bills and mcconnell's efforts, where do you look for the best edge? >> i think the writing is on the wall you're seeing such tremendous bipartisan support for this plant that had been banned for 70 years we're really looking at this and saying this really should be and is an agricultural commodity you're seeing mitch mcconnell lead the way for his state, kentucky, and this will replace a lot of the revenue lost by american farmers to tobacco. so we're very excited about it i think the future is very bright for our industry and our category >> and i realize charlottes web is doing something a little bit different than some of the other names that are associated with marijuana and marijuana derivative products, but in terms of valuations and the wild swings we've seen in some of the stock moves, your take on the market and what it means for investors. do you worry that we could be
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seeing a potential bubble here, especially if it impacts businesses like yours that maybe are fundamentally different? >> well, i think the difference between us and some of the other players in the sector is that we have revenue and profitability many other players are really still trying to achieve profitability. so we do see the valuation swings, the market cap swings. does it concern us not necessarily. we're really focused on our business and really increasing our market share >> well, thanks for joining us today. >> thank you for having me when we come back, we are waiting the president. he's hosting a cabinet meeting at the white house next hour to talk about u.s. trade relations. we're going to watch that. dow is down 250. oil with a six handle for the first time in a month. "squawk alley" starts in a moment
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"squawk alley" is live ♪ ♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and john fort. the president is set to speak on trade and the economy in a few moments at this cabinet meeting. when that begins, we'll bring them to you live in the meantime, stocks coming off their best day since march but getting back a little more than half of yesterday's gains watching the nasdaq, it did start off the day higher but is now in negative territory as well one bright spot, though, as you know netflix surging off the high
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