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good thursday morning. welcome to "squawk alley." i am carl quintanilla with morgan brennan and jon fortt nasdaq is negative first time in three days after yesterday's rally. higher for the week. faang stocks are mixed, investors look to see what the split in congress means to big tech good morning sounds like you think the economy is neither too hot or cold earnings guidance is not as bad as some feared, and now elections are out of the way, right? >> exactly we have one uncertainty removed. tomorrow we wake up to another list of headline risks we're watching, but so far so good we are watching for

fundamentals, they're coming in strong tech is leading the market you have a breadth of leadership, you have over 55% of stocks that are comprising tech outperforming the broader market 60 industries are leading. nasdaq is up 10% year to date. so far so good >> so at this point you would not be looking to fade, looking at your top holdings, amazon, a alphabet, visa, coke and disney which we get tonight >> yes i think what's important is somewhere along the way we sort of have been precandidaonditionu can get exposure to overall tech stocks, the market is surprised are more securities. there are hundreds within the tech space and hundreds in other areas of the market. focus growth strategies which does have exposure to growth

year areas of the market, we are in investing of 9 of 11 sectors, we have over 30 securities there's plenty of growth to be had, it doesn't have to come from one or two individual names. stock specific stories matter and that's what we're focusing on. >> larry, split congress, is that good or bad for tech? >> i'm not nearly as much concerned about domestic politics as i am the foreign geopolitical situation, especially with regard to tech as the previous speaker said, the fundamentals look absolutely terrific, but trouble always starts at the margin i think the margin is not within this continent, the margin is in china. i'll give you three things that i find troubling one is the did he swhat happenel stocks the well off people in china are

likely to be visiting less the second thing is the relentlessly bad action in a major global tech company, one of the best managed i have seen. ten cent is under pressure by the government who is slowing their development of gains and the third thing, i was troubled when i woke up and read "the wall street journal" and listened to hank paulson suggesting being cautious in china. so far the numbers look good the runway has to be clear, and if we can't solve the problems with china and i'm looking forward to the summit between xi and trump or the meeting that's likely to take place later this month at the g 20, i think it is

hard for multiples to improve. bull markets are about earnings but they're more about multiples, i think the thing at risk is the multiple. >> i want to go back to a point you were making about tech being more than a few big names. i wonder what size you think is perhaps the most overlooked. there are lots of midcap tech stocks, up starts trying to build, make a name for themselves, maybe working in ai or cloud areas some are getting bought up which of those many by sector or specific names do you find most interesting? >> there are a lot of interesting stories. i am glad you brought it up. i think within tech specifically and communication services post the split, there are a lot of names of interactive media, lot of names in security software.

i continue to focus on riding the wave of long term secular growth you talk about ai, we're in beginning stages you talk about digital advertising, we have done a lot of work. there's still a move toward more eyeballs online. when you talk of e-commerce, less than 10% of global spend is spent on internet. so those stories do not change overnight, and there are plenty of companies that continue to benefit from those cyclical, secular shifts that will allow them to continue to gain greater market share and therefore do well, irrespective of the backdrop and irrespective of all of the headlines we talked about. currency risk, china risk, cost of doing business is not going to go away we are looking for organic growth stories propelled by secular growth tail winds we think are going to be with us for years to come.

>> larry, your thought a moment ago, if the weakness is about china and see it in win and 10 cent, you can hear those that will say how does it matter if you're not in those names. the u.s. is decoupled from asian weakness. >> i don't buy that at all, carl i think that the world is global and there's tremendous growth in asia you go to hong kong over a period of 20, 25 years, it is astounding how much growth is, to say nothing of the mainland, china. things happen at the margin. if you're running a global company and not seeing demand from china, you're just not going to make your numbers it looks like in the last month or so, all of a sudden the

chinese government has decided quietly to make things more difficult than they had been normally i always thought 10 ent was well connected with the chinese government the fact that they're having problems lights the fire under my cautionary switch and certainly the comments from win about mccal. i watched mccal for 25 years >> we know >> i'm not liking what i see the numbers are terrific you're going to have a phenomenal fourth quarter, the advertising business is going to be wonderful but rates are going up and at the margin, carl, there's silly behavior going on by investors in specific stocks some valuations we talked about them, they don't make sense to

me maybe they'll unwind, maybe they won't. who knows. >> we'll watch it closely. thank you. see you soon and a big show still ahead shares of roke plunging the ceo, anthony wood, joins us exclusively in a few minutes. later, blackstone's vice chairman byron wien isoing jni us more "squawk alley" to come. don't go anywhere. i am a family man.

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fourk. stocks taking a breather what's on investor shopping lists since recent lows. >> some of the names are interesting, they represent cyclical or economically sensitive parts of the market, some of them hard hit in the market turmoil that happened in october. as we look at some stocks on those shopping lists, the biggest gainer since the market lows onoctober 29, vulcan materials. martin marietta, both up almost 20%. and under armour, and caterpillar. some stocks that have seen buying since lows on the 29th.

you expand to the sectors more, the idea that materials and consumer discretionary could be some of the biggest gainers here, 9.5% gain since the lows there for the specter spider discretionary up 8%. utilities still in the green still the biggest laggards among those biggest in the s&p if you look at the s&p 500, we're in a no man's land now you look at levels we're at, 2810 that's an area of resistance some are watching. 2763 is below where we are now this is the zone we're in, something we'll watch for sure as we talk about the idea that internals are improving, as of last night's close, number of stocks above the 200 day moving average, more than half of them. 52% of the stocks. how many within 5% of recent

highs? 52-week highs or better? 110 stocks there within 5% of 52 week low or worse, around 10 stocks. just a handful of sitting there. and morgan, that's something we're going to watch as the bullish narrative tries to take hold back to you guys >> something to watch. dom chu, thank you. health care is the number one issue among american voters first time in ten years. health care spending among americans skyrocketed to more than 18% of gdp. joining us, john scully, chairman and cmo at cloud based pharmacy manager great to speak with you today. >> nice to be here. >> in light of election results, is obamacare here to stay? >> i think it is going to be

repaired, not replaced health care was a high priority during the campaign and midterms that i believe the democrats are going to put a high priority continuing to not only repair obamacare but to expand health care alternatives, particularly government subsidized alternatives with the characteristics of medicare and medicaid not affordable to do medicare for all, but there are many things that can be done with innovation >> drug pricing, need to curb it seems to be one of the few bipartisan issues the congress could decide upon. what do you expect in terms of that, and why do you think health care stocks are rallying in light of that fact? >> i think health care stocks have been strong all the way back since 2014. the health insurance industry, many of the largest payers are

up 300%. what i find interesting is now big health plans are taking seriously the important role of innovation for example, mckinsey global shows misuse, $900 billion and a lot of it huge administrative inefficient sees. we are focused on automation, transaction platforms that's changing the landscape and possibilities of being able to bring down drug costs for prescription drugs, being able to take inefficiency out of

health care. >> it is hard to drive it it out of u.s. health care at large is it even reasonable to expect legislative action can begin to do that? what are the forces that need to kick in to start to drive towards some of that greater efficiency you say gets us where we need to be in drug and costs. >> the huge political attention in the past year, in particular to pharmacy benefit management, as being a middleman which is very opaque, charges rebates and spreads, no one is quite sure what its influence is on the actual consumer pricing of prescription drugs the reality is that there's innovation going on, we are one company, others are working on their solutions, taking automation to an entirely different level that can take

complexity of thousands of rules and being able to bring in machine learning, bring in transaction platforms that are able to open up the whole pharmacy benefit area and say look, we don't need to take rebates any more, we don't need spreads. we can give transparency to pricing. those things get politicians' attention and there will be i think a lot of increased awareness of how much innovation is available to the health care industry that wasn't around a couple of years ago. >> i want to dig into that more. critics, including hhs secretary saying pvms are to blame for high drug prices you say there are already changes in pbms starting to cut the cost >> i didn't say that i said there was opportunity to cut cost i believe we're the first to say

we can bring in so much lower cost to the way we perform that process that we don't need to charge rebates and don't need spreads. we can do it because we're so much lower cost. we're working together with our partner, a $70 billion plan that focuses on medicaid. they learned how to make profitable the very difficult the affordable care act changes. well, now as they started to on board and roll out what we are doing at rx advanced across 27 health plans, it means they can become even more aggressive. and it is one of the reasons you're seeing centene stock continuing to grow the past year why they're so well poised for the big attention the house will give there has to be a better way to deal with the high cost of health care. >> john, great to get your

thoughts, especially on the heels of election results. and look at shares of qualcomm, the stock is getting crushed this morning, down 6.5%, despite better than expected results. qualcomm did issue current quarter guidance below consensus for a number of reasons, including some softness in smart phones globally versus analyst expectations, loss of apple modem business, and higher legal costs from the on-going royalty battle qualcomm continues to be locked in a challenging situation their business model is based on extracting maximum profit from their ideas, from their ip that's a big part of the 5g story they're writing into 2019. if they give into apple on arguments around royalties, it puts their wholebusiness model at risk. they feel like they can't do that, they feel they're going to

win. have a good track of winning these legal fights and settling them, but this one against apple is a mismatch for sure >> ask samsung how some of that experience went. >> samsung, i mean, because it is the biggest display provider out there, flash memory, so many other things, it is bigger than qualcomm in a lot of ways. it has less profit risk than qualcomm has had in this it is a bruising battle. investors thought there was light at the end of the tunnel that was more stocks >> stock up 6.5% today. when we return, anthony wood joins us, following the beat on the top and bottom lines why the stock is falling sharply. doup7.ft t bak w 2 welcome to the place where people go to learn about

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despite the beat on top and bottom lines, the symptom down nearly 10% anthony wood joins us now exclusively, the ceo of roku good morning >> good morning, jon >> i think investors always had a hard time understanding roku and where it is going. interesting here, some were hoping for a bigger active platform user number the amount of engagement on the platform, the number of minutes of content that people are consuming was a lot higher than a lot of people had been looking for. how do you see the way you're positioned and the challenge this holiday season in getting roku hardware in people's hands and living rooms versus other people's >> well, as you said, we posted some great numbers we had a great quarter you know, we beat, our outlook beat analyst consensus just as we have done every quarter for the last five quarters we went

public our business is just in a fundamentally good spot. we are well positioned look at, for example, active accounts, a key operating metric for us, active accounts end of the quarter, almost 24 million that's up 43% year over year if you look at other industries, for example, traditional pay tv, they lost a million subscribers. we added 1.8 million net new active accounts. cord cutting is a real phenomena, it is happening as consumers understand the benefits and advantages that streaming offers, they're switching to streaming so that's the great trend for us we are well positioned and we're set up for the holidays. the holidays are great for us, we sell a lot of products, a lot of roku tvs and streaming players. looking forward to a great christmas.

>> there's been talk on the call about percentage of i believe the 18 to 35 demographic that's viewing tv through roku. i believe you said it is 10% you also say that you have the ability to do attribution at a level much higher than traditional cable companies and tv has been able to do you expect to balance out and spend. give me a sense of time, do you have a sense how long it will take for your representation in viewers and attract a demographic to be equalled by the amount of spend you're able to capture does it happen in 2019, does it take a year or two longer? >> this is interesting most of our gross profit comes from advertising we have our platform segment where profit flows from. the platform segment was up 74% in the quarter, very healthy growth two-thirds of the platform

segment is advertising video ads were up 100% in the quarter, awesome growth. and i think the stat you're referring to is that there is data that shows if you look at a particular demographic, 18 to 34-year-olds, 10% of the people in that demographic are using roku to watch tv if you're an advertiser, you're seeing your viewers shift from traditional linear tv to streaming. 10% of the people in that key demographic switched not just to streaming but roku if you want video ads, you need to advertise on roku that's one of the pitches to advertisers. and of course streaming is -- streaming ads is superior to tv. for a lot of reasons, they're targeted, and every one of them measured that's one of the techniques we use. we measure ads, bundle data

analysis with ad sales because we know that our ads work better so when we show that to advertisers, they're getting better roi, ads are working and they know they're working because they're trackable. that helps advertisers have confidence to increase their budgets. the ad business in the u.s. is a $70 billion a year business. all moving to streaming. it is lagging the viewers, but that's how it always works when viewers move to mobile, ad dollars took a few years to catch up, but they will catch up it is going to be a very large business >> anthony, i am staring at a cnbc report now that roku is talking to more media companies about putting their content directly on the streaming app in exchange for a larger share of revenue. what can you tell us about the plans? >> i mean, i can't speak to rumors roku is a distribution platform.

we do it through apps and through roku channel, which is an increasingly popular way for viewers to get access to con tent we aggregate content we started with entertainment movies and tv shows, continue to add depth to that. we added news recently and we had some great news days. maybe not great for the country, but the hurricane was a great news day for roku channel, and midterm elections recently, very popular on the roku channel. we added more news content to roku channel in anticipation of that we keep adding different content categories to the roku channel. >> another question income cast is looking at -- in comcast is looking at a streaming box for those without cable, that's the parent of this network by the way, but what do you voiew as being roku's advantage once the

googles and apples try to enter more and more into the streaming device space to try to pull more of that streaming and trend in their direction. >> yeah, the streaming is a huge business it is going to be a huger business it attracts big competitors. that's not new we have been competing with big competitors the entire history of streaming we are america's number one streaming platform, our market share is growing and we get our market share by selling players, and we win because we are laser focused on streaming. we have the only purpose built value of streaming we have value, great consent selections roku plus won the editor's choice we build great products.

we continue successfully with these companies for a long time. >> anthony, thanks the stock is off the lows. anthony wood, ceo of roku. >> thank you markets closing in the uk and across europe. stocks making modest moves after wednesday's rallies. banks are up, and seeing a volatile session for the euro. eu forecast a slowdown in growth and then a surprise, germany exports fell in september. that narrows the trade surplus with the united states. let's get to contessa brewer for a news update. >> hi there. a hooded gunman wearing all black opened fire at the borderline bar and grill last night, using a handgun and smoke device to kill 12 people he has been identified ian david long

he was found dead in the bar no word yet on motive. south korea says the united states confirmed north korea called off a meeting between secretary of state pompeo and a north korean official. lion air aborted a flight when one of the plane's damaged a wing tip striking a lamppost last week, they had a plane that went down that killed 189 on board. harvard medical school receives the largest gift in the school history they'll name a research institute for the donor. that's the cnbc update let's get back to "squawk alley. >> thank you. when we come back. the dow off the best day in

three weeks. 13 straight days of triple digit moves. we talk to byron wien about wh day may be the end of a massive rally. rebekkah: opioids has taken everything and everyone i've ever loved away from me. everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning.

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11.6 million barrels a day the u.s. is producing more oil than russia and saudi arabia jim cramer earlier saying we could see oil in the 40s again because of the infrastructure investments made in this country in the energy now paying off many agree with that notion. other factors to take u.s. crude lower, aside from domestic supply, slowing demand, volatile stock market back to you downtown >> thanks. markets in a tight range, following yesterday's surge across broader indexes our next guest says it is the first line of a script to another end of year rally. the vice chairman of blackstone wealth solutions group, byron wien is with us. good to take your temperature. >> okay. good to be here, carl. >> one of your surprises at the beginning of the year was the idea the s&p would go through a correction of sorts. you said towards 2300. didn't quite get that far.

then you said would end the year above 3,000 as earnings expand do you think that's still intact >> i am not backing away from it we have another 200 points to go i think we have another two months or the better part of two months so i think if we don't get to 3,000, we get close to it. >> what takes us there is it some pivot from the fed? continued strong earnings? buy backs, mix of everything >> well, earnings are the key driver earnings are still coming through, plus 20% year over year the tax cut is a big part of it. earnings next year are good, too. they won't be up 20, may be up 10 in an environment where earnings are increasing 10%, the market is not overvalued, as long as

interest rates don't go up too much and i don't think they will. i think they'll go up, but i don't think the 10 year treasury will exceed 3.5% >> byron, i am glad you brought up interest rates, we're moving higher ahead of a fed meeting later. 3.224 the yield on the ten year now. do you think if we get to 3.5, could we see more volatility or another pull back in stocks or are we peaked here >> well, i think we got undervalued with the correction in october, and i think we're in a march towards 3,000. as i indicated to carl i think the fundamentals in the u.s. economy are really very powerful we need to worry about more than interest rates the fact that the rest of the world is not doing as well as we are. the question is are we going to pull them up or are they going

to drag us down. >> byron, you were with us in late september at the time you said the president was right to try to get a better deal out of china, but ties would get worse before they got better. would you agree that's what happened and what happens now do you think? >> i think that china is slowing more than they want to i think it is imperative that they do a deal with us we want to do a deal with them the rhetoric is hostile as you point out. middle of next year, i think we'll have a deal. >> in light of all of this and your take on the markets, where should investors put their money? specific sectors or areas? >> yeah. i still like growth. i think there's money to be made in technology and biotech. i think we're going to get a buying opportunity with energy

i don't agree with jim cramer that we go down into the 40s but -- or at least a suggestion that that's possible i think we'll stabilize here, so i think there are opportunities in those sectors in the u.s. i think that china has come down hard and i think the emerging markets are a place to watch i don't know if right now is the entry point but i think you are going to get a buying opportunity in the emerging markets. >> byron, we're going to check in with you before the end of the year maybe hopefully a few times. talk to you soon thanks again as always >> thanks for having me, carl. following tesla's new chair selection, you don't want to miss "squawk box." what's next for tesla and elon musk a lot more "squawk alley" still ahead.

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medicare advantage plan is the right plan for you. pick up the phone, and call the number on your screen. the call is free. and licensed humana sales agents are standing by. so call now. i am scott walker. 36 and counting, that's how many trading days are left in 2018. is the stock market primed for an end of year run we debate that we'll discuss our call of the day, courtesy of our special guest for the hour, mario gabelli. he tells us which entertainment stocks will surge in the next

months and pete najarian on a stock's next move. jon, see you in 15 >> see you then, scott thanks. now over to cmo to rick santelli and the santelli exchange rick >> thanks, jon i like to welcome my special guest on fed day i would normally say fed wednesday but it is thursday vincent reinhart, thank you for joining me this fed day. >> thanks for having me, rick. >> all right there's very little doubt in anybody's mind that this particular tightening cycle, whether we look at our fed or central banks is unique in every way. we are pulling back from types of liquidity we never put forth. do you agree with that >> no question about it. central banks dig deep into the tool kit of unconventional policy and what they found is it was easier to start them than to end them

the fed is in motion, shrinking the balance sheet, motion with policy rates, is going to take the ecb another year and bank of japan longer after that, but they've got a long way to go >> i don't mean this as insult to investors, but i think over the years investors have gotten a bit lazy central banks around the world are leading investors to make sure in their opinions that liquidity alleviates post crisis ills now we have all of these static comparisons. everybody points to fed fund futures, says this will happen in 2019, this may happen in 2020 i think we need to be more dynamic in our approach. what do you think? >> i think that's right. i think chair jay powell staunl understands that and will be holding investors' hands less tightly going forward, getting out of the guidance game

think about it we have been around to remember when the first fridays of the month was exciting, because the employment report mattered to what the fed would be doing in the next meeting the fact is the fast few of them have been sad because there's no number that could have print that would influence what the feds are doing why? because they feel compelled to tell us the meeting before what they're doing at the next meeting, and they're on a cycle of tightening only once a quarter, tightening at mows, one percentage point a year. this is as measured a pace as we've ever had >> vincent, do we need to get to what is deemed as neutral to get to the type of symmetric fed policy we had in bygone days before computers ruled the world, where you had to stand up as an investor, survey the surroundings, and decide what you think the fed may or may not

do would it be healthy to break the addiction of liquidity and push investors to that role >> that's jay powell's real exit strategy you inherited a communication strategy, a lot of guidance, tightening, quarter point every quarter. investors understand it. he is going to keep on doing it until he gets in the neighborhood of neutral. that's probably one percentage point or so from here. at that point he is going to stop and say rates could either go up or down or could stay the same it is about the economy. you can figure it out, too it is up to investors to come to their own view of what monetary policy should do he is not going to tell you what they're going to do. >> i think that would be a nice world to live in the reality is to get to that point, it is most likely going to create a lot of unease in the marketplace. may show up as equity volatility

or a variety of articles saying the fed is working against the economy. in the final minute, what would you tell investors how to look at the economy and fed the next couple of years. >> so jay powell is on track, it works for him, so he's going to do a quarter, a quarter, until it is time to stop wun once he stops, it is investors' responsibility to figure out where rates are headed, he is not going to tell you where they're headed because he doesn't know where they're headed we have to do more due diligence in understanding the macro view and risks the fed are facing. >> back to the future, i think you said it before the cameras went on. vincent reinhart, thank you for a great discussion we're going back to jon fortt. >> thank you, rick and everybody, tomorrow keep an eye out. don't miss cnbc's exclusive o vitaorw with procter & gamble cedad yl "squawk alley" continues next.

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i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. . google's ceo sending a memo to employees acresting the company's sexual harassment policies in the wake of the massive employee walkout our aditi roy is covering it >> an email in the wake of the massive walkout in which 20,000 people participated. addressing the company's concerns over the handling of

sexual misconduct. all corners of the earth were involved here's what the ceo wrote, started off by saying we recognize we have not always dwoten everything right in the past and we're sorry for that. it's clear we need to make changes. he also outlined some of the key steps the company is making to make things right with employees. the number one thing is getting rid of forced arbitration. key demand of the people involved in the walkout. the second thing was to streamline their reporting process for these types of sexual harassment cases. and another point is also expanding the company's sexual harassment training. we can tell you that in being out there last week with, some of the organizers, they told us that these are all key demands that they've been talking to the company about for years now. and when that "new york times" report came out a couple of weeks ago, referring to andy reuben, the father of the android, his exit package worth $90 million after what was reported as a credible claim

against him. the organizers told us this was a $90 million straw that broke the camel's back but it brought this issue in the forefront. not just in the company, but in the eyes of the world. they did say, though, the organizers, last week, that they were feeling like they were heard. and this appears to be more proof of that. again sundar pachai, outlining some new steps the company will bemaking in terms of handling the sexual misconduct cases. >> i'm not surprised how quickly they're making changes, considering how quickly they move to address employees concerns was there mention of any potential clawbacks, in terms of the $90 million pay package that triggered the walkouts >> we're not aware of any right now. but we're going to continue to dig into this and talk to the people who really launched this movement within the company. and see their thoughts on it

it will be interesting you're right, there has to be something done given just the sheer intensity of these walkouts which pachai did support and just looking at that outpouring all around the world. but it will be interesting to see what further actions get taken. >> along those lines, aditi, i believe one of the employs' demands was for an employee representative on alphabet's board. that seemed the least likely to happen is your sense that perhaps this response from sundar pachai saying here's how much you're likely to get and forget about the other stuff. >> it will be interesting to see how this affects the conversation you see some key things being mentioned in this email. it will be interesting to see, does that end the conversation or does that simply propel it forward for even you know greater things to happen down the line >> huge story after those pictures we got last week aditi, aditi roy following the alphabet

news today watching the markets, dow up 62, financials leading here, eaofheedup .66%. ahd t f decision in two hours.

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canada's name is down, canopy, cronos in the red. it was a different story yesterday after ag sessions' departure. what's different this morning? some analysts say the sessions' change may not benefit the industry at all. his replacement is quote likely a temporary pick and that there's a risk trump will nominate a new ag who is anti-cannabis. they go on to say the clearest path remains legislation for medical use. veteran access and banking services, too. >> well certainly see how that goes, especially given the fact you had a number of states in the election voting in favor of ending bans on a statewide basis. coming up on the "closing bell," we'll break down the market's moves post fed decision mark mobius and jim grant are with us and on the earnings front julia borestein sits down with disney's chairman and ceo,

bob iger. >> disney, drop box tonight and activision, and the fed decision at 2:00. the final meeting without a press conference so watch closely. let's get over to headquarters and the half i'm scott wopner, after the best day for stocks in three weeks as the market set up for a surge into the end of the year it's 12:00 p.m. noon, it's the halftime report and it's good to have you with us on this thursday afternoon here to debate, joe terranova, josh brown, and our special guest, mario gabelli, the founder and chairman of the gabelli funds, we do begin today where else, stocks, they're mixed following the first post mid term push. only 36 trading days left in the year mr. gabelli, welcome back it's nice to see you again. >> good to see you, somebody knowing i was going to be on the show today said i wa