they support something like 12 to 14 million jobs at average wages better than the rest of the economy, so it is critically important we get that ratified and move on to a trade agreement with china ultimately a trade agreement with the european union as well. >> mr. fritz, always appreciate you joining us quarter to quarter. had to cut it a bit short given everything else that's gone on in the show. stock up over 1% trans-fritz, chairman and ceo of union pacific. we had a triple digit gain in the dow, now gone red back to 2994 what's going on, dom chu >> what we're watching, carl, is churning in the marketplace, sector movements take a quick check what's happening with the overall market picture most trading in positive territory sector wise. tech is a notable laggard. we are watching that closely leading to the up side, health

care names among those moving higher, mckesson, amer source better again, centene, seen some of them on a tear following news they're in talks for possible $50 billion or thereabouts settlement related to opioid lawsuits health care versus technology and what's happening with other names, it is an interesting proving point as markets are near record high levels whether there's more momentum. in the past week or so, more trade headlines, not just between the u.s. and china, and brexit this morning, moves more sensitive sectors in the economy. semiconductors, home builder stocks health care you want to keep an eye on, carl back to you at the new york stock exchange to everybody, good morning it is 8:00 a.m. at netflix headquarters in california, 11:00 a.m. on wall street. "squawk alley" is live.

♪ ♪ >> i am carl quintanilla with morgan brennan and jon fortt at the post nine. we start with netflix, another miss on subs well off session highs mark mahaney joins us to talk about that with julia boorstin let's go to you first, julia, set up what we heard last night.

>> reporter: netflix may have beat on earnings per share, largely because of higher prices they rolled out over the course of the year. there are big questions about subscribers, international subscribers better, domestic subscribers fell short, and guidance, the numbers were light, but the ceo says they're taking into account all of the competition launching and stressed they have been preparing for this onslaught of new rivals for years, saying they're ready to go, all their investment in original content, especially in the u.s. in movies should help make them more valuable to consumers. >> mark, i realize we're off highs of the morning, but the move as a result of results does it make sense to you >> yes, just because fears were great, widespread calls across the street for them to miss international sub numbers by one to two million

that didn't come true. you had the first relief rally in the stock there are two negatives to focus on here. one is looks like we hit peak subs and secondly, the company doesn't have as much pricing power as it thought it had and bulls like me thought they had elevated churn for not just one quarter but for multiple quarters i think they still have pricing power in the future, have to work harder on the content slate to justify future price increases. it is a negative for the quarter. >> mark, how low can domestic subscriber growth or domestic subscribers go before it becomes a problem for how you model this company? seems like they charge domestic subs more, that's part of what's fueling their ability to buy and create all this content. international subs largely bring

in less revenue, so even though those grow, they don't amount to as much, do they >> no, you're right, jon two points i think they'll need to continue to grow u.s. subs. we think they can. they've grown u.s. subs at the clip of close to 5 million for five years that clip is 2 to 3 million the next two to three years, that's what we hope is the case if they don't grow subs, that's an issue for the stock the game is on for netflix international, it is 90% of sub growth rolling out 130 original language series for international markets for 30 countries in 2020. for global streaming companies, that's what you have to do roll out local language services netflix is ahead of the curve and game that's where the growth comes from it is lower, but there are plenty of markets, there was too much made of india subs. we think they have pricing power

in international markets like in the u.s. but have to work hard building out the content slate, but the game is international. >> to your point, jon -- i'm sorry, go ahead. >> go ahead, julia, then i'll ask you a question. >> i was following up on jon's point, i think the question of average revenue per user internationally, though in india, that's where they're experimenting with lower cost subscription, they're saying that they're going to be rolling out more lower cost subscriptions or experimenting with that in other markets i think the question is whether netflix leans more on less valuable subscribers for the international growth as it comes up against a limit to domestic growth i think that's an area to watch. it will be interesting to see if average revenue per user becomes a metric as much in focus for netflix as it is for say the social media companies sorry, morgan. >> from the content side of things, i get the value and bringing people back to watch more and more of original series, but the big bet on

movies, what's so valuable about that >> it is interesting because on the call, netflix content chief said we're investing in movies, have ten movies they're releasing, movies are valuable they think of movies something they're more likely to leave the house and spend $12 on a ticket for. they're seeing this as a way to build the value that their subscribers get from the service, it is yet another thing that's bundled in, not just rerunls of old series and new original series, this is something worthy of being on the big screen, one reason they're putting it in theaters and using it as marketing to sign up for netflix or hold onto their netflix subscription. >> that would make sense if they weren't spending so much money on shows that nbc had in prime time in the mid 1990s. do you shake your head when you see the numbers? >> yes, i shake my head when i realize how popular those shows

are, i see my sons watching shows produced before they were born, i am shocked by it one other thing in context, spending over 500 million for seinfeld for five years. here's where the scale comes into play, that's 1% of the annual content spend scale matters. the way content is purchased scale matters. netflix's big advantage, they have three, four, five times as many subs as anybody, they can afford to outbid other people for content, but it is getting more expensive, no question about it >> i wonder do we yet know how sticky international subs are going to be once they reach scale in a down economy? we love our tv here, but might people cut netflix and result in higher churn in international markets? >> you know, you're raising the recession question, jon. i think it is the right question i look at all of these consumer

internet names, almost all customer discretionary spending, i wonder which is least impacted by recession when it comes i think netflix may be one of those, for 8.99, one of the least expensive, may be the single least expensive form of buying entertainment, given all the content you can get. it may be the somewhat recession resistant name, netflix. >> guys, quite the debate, even intraday as it has come off morning highs. mark, talk to you soon julia, thanks. >> thanks, carl. >> i think it is a topic we'll continue to hit this hour. after the break. co-head of the goldman, sachs banking division joins us. and netflix, down 6% we breakdown big blue's quarter next stay with us

the goldman, sachs summit kicks off this morning, wilfred frost joins us with a special guest ahead of the interview with david solomon this afternoon. hey, will. >> reporter: hey, jon, good morning. i am here with gregg lemcau, head of investment bank at goldman, sachs good morning thanks for having me. >> thanks for having me. thanks to cnbc for being here to shine a spotlight on entrepreneurs and great companies. >> some of whom are joining us

throughout the day recent earnings, your department, investment banking, revenues were down 27% year over year, some of your rivals seeing increases year over year what was that down to? >> you saw five major banks reported this week our investment bank results were softer, quarter over quarter, year over year than competitors, due to phenomenal outperformance last year. we look at the absolute results, put up advisory revenues of $716 million, about 40% higher than the next competitor. that's the key barometer of the ceo hiring us on the most important thing, most important business they can do underwriting business was softer you step back and look year to date, investment banking results were neck in neck with jpmorgan, 30% ahead of the next competitor we feel strong about the franchise and outlook. >> they were behind what most

analysts forecast. what about fourth quarter, is it because some deals, advisory revenues were pushed into q4, see an immediate quarter over quarter bounce back? >> it is driven by clients, some is timing. pipeline is strong, backlog is up we feel strong about the fourth quarter and our position. >> in terms of corporate confidence overall, has that been hit of late by the trade war or other factors >> it is weaker. fascinating dichotomy in the markets. equity markets at or near all-time highs, at the surface, rotation away from growth and value and sectors that underperformed debt markets, you've got capital markets that are free flowing, people are anxious about credit cycle. m and a, $3 trillion of volume, but under the surface, number of deals are down 15% there's a lot of mixed signals and data companies and boards are anxious on trade war, brexit, the

election cycle, lots of reasons to be cautious when you talk to any individual ceo, they'll tell you they feel good about their business and are prone to action. it is a set of mixed messages in the market, people are generally forward leaning. corporate counters are down from a year ago. >> confidence can be one of the first things to turn before the data does. are you suggesting it is down enough, we could be looking toward recession or that sort of thing for next year? >> i don't think i would call it recession, confidence is softer than it was. you see good news on brexit or resolution of trade war, that confidence can turn quite fast >> morgan has a question from the studio >> great to have you, gregg, thanks for joining us. i want your thoughts on the woes of wework. it is casting a shadow on the ipo market, questions on governance how do you think about the impact or effects of everything that's played out with that company and what are the lessons to be learned yet. >> thank you, morgan

in terms of the ipo market, third quarter was tough for the ipo market had a handful of companies go out, not perform well. a lot of focus on wework which pulled its offering. i think it is indicative of a trend in the market overall which had been focused on valuing growth, almost growth at all costs, that's tempered now there's growth and profitability. >> has damage been done to prospect for other ipos in the next six to 12 months? >> i would say the process, the equity market is waiting to see what's next in the pipeline. not sure i would call wework a failure, i call it the process working. you had feedback from bankers, advisers, lawyers around what the right governance structure should be, feedback from investors about what valuation would be, it is a high profile company, played out in public markets, but that's an example of the process working >> the process working for the public market investors that didn't get drawn in at an

overvalued price like they perhaps did for uber, not sure you can say it worked for you guys you didn't get your fee and lost a little face because you attached your name at high valuation and it didn't go through. >> yeah. less focused on getting a fee, more focused on the right advice and access to capital markets when it is ready for them. the process is challenging and this one played out publicly but what we try to do as advisers, you get, i will make it generic, you get a set of projections from a company, they say what do you think the company is worth, you hit this set of projections, here's the kind of companies they'll cam o compare you do and you do due diligence, markets move up and down, a lot of that happened through the process. it is that process playing out what you may have said in a pitch what a company could be worth is different what the projections turn out to be and what the market turns out to be. >> where are you on direct

listings, do you think that's bad for goldman, sachs >> direct listings are a great innovation we embrace that. goldman, sachs was the lead adviser on for spotify and slack. i think they're unique, not everybody. for spotify and slack that were big brand name businesses that raised a lot of capital, didn't need access to capital, had a brought investor base, it was an interesting solution it is not for everybody. some companies need to raise capital, sometimes there are other investors that may not provide liquidity unless there's a specific stock to be sold like a traditional ipo. >> wanted to ask a corporate question on balance sheets specifically where do you stand on the debate when people say debt levels are high, interest payments relative to cash flows are low, whether that he is a build-up of risk if and when rates go up >> i feel good about corporate balance sheets you have cash that's 1.6 trillion that's quite strong.

almost all clients have taken advantage of the situation in the markets to extend debt profiles and bring down interest costs. i think they're well positioned not just for the near term but long term. >> my final question is on the headline of confidence at the firm, particularly amongst executives, over the last year included in the last results and earnings call, we heard how compensation is down at goldman, sachs, and culling in the numbers of partners overall. how is confidence amongst leaders like you at goldman, sachs as we come to the end of david's first year in charge >> confidence is high, importantly at the end of david's first year in charge, people are energized you get inside the firm, david set forth a strategy nor growth near and long term, trying to drive growth at the firm is exciting there's focus on culling of partners the beauty of the partnership structure and model is keep it small, keep it special, create room for the next generation of

leaders, you need to make room creating that opportunity and leadership opportunities for the next generation is energizing. that's how the leadership team feels. >> great to catch up >> we can't wait for that, that interview coming up on "closing bell" at 3:00 p.m. eastern. we'll look at european markets set to close live report from london. line. i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. vo: take control of your online reputation. get your free reputation report card at reputationdefender.com. find out your online reputation today and let the experts help you repair it. woman: they were able to restore my good name. vo: visit reputationdefender.com or call 1-877-866-8555.

that deal for brexit, the uk and eu come to an agreement before an important meeting in brussels willem marx that what happens next >> reporter: theeuropean union is likely to endorse this deal between the commission and uk government that of course doesn't mean it ends up being the final deal

because saturday, british lawmakers will meet for the first time, and they'll examine details of the agreement, there's no guarantee they will approve it if they do, all ends well, brexit could happen end of october, a few obstacles in the way. if they don't, he could be forced to ask for extension of four month delay we heard from the man that presides over the european commission, he doesn't want to see an extension it is not in his gift to decide. would be up to other european leaders. what boris might be doing is persuade them to a longer extension or short one to tweak numbers inside parliament. not a great look going into votes saturday back in westminster. >> willem marx every twist and turn the next

couple days which is crucial to all of the process seema mody joins us with more on what brexit headlines mean for today's movers in europe, markets set to close in a few moments. >> the big headline, british prime minister boris johnson announcing agreement was reached between the uk and eu. stocks had come off highs in the last 20 minutes. you can see france and spain lower on the day the big beneficiaries of a possible brexit deal comes down to banks they have significantly underperformed, european peers over the past ideas a deal would improve investing environment, risk appetite, m and a which has come down in the last three years because of brexit uncertainty. lloyds banking, royal bank of scotland, some of those to watch in the uk. the pound down today, but up 4% so far in the month of october so that could be a boone for some domestic names in the uk.

look at some retailers, the idea is a stronger currency would improve purchasing power for uk consumers. british land, a real estate investment trust real estate is a sector that's been weak in the uk. you can see it is up 3%. here are some major retailers. wh smith, marston's. brexit is not a done deal, it avoids worst case scenario of no deal, uk leaving with no agreement, but the immediate question is if the agreement will be ratified by parliament this weekend political analysts say it will be a close vote. if it is not, will they get a brexit extension and what would happen if there's in fact a general election still a lot of open ended questions. time for a news update

sue herera has that at hq. >> i do indeed thank you very much. here's what's happening at this hour the u.s. ambassador to european union arriving on capitol hill to give his deposition in the trump impeachment inquiry. "new york times" recording he will testify that president trump largely delegated ukraine policy to rudy giuliani, sondland saying he disagreed with the move. chicago teachers going on strike today after failing to reach a contract deal with the nation's third largest schoo district it is the first major walkout by teachers since 2012. classes have been cancelled for some 300,000 students. a preplanned brush fire burn got out of control, prompted evacuations in northern colorado the elk fire is a 175 acre blaze about 10% contained, is threatening 50 homes more than 900 people told to evacuate. california is launching a

statewide early earthquake warning app. my shake app doesn't predict earthquakes but uses sensors throughout the state to detect when one is beginning and calculates intensity and location the idea is to give everybody a few seconds warning to take cover. that's the news update this hour i will send it back down to you, morgan >> wow, that's an interesting app. i have to check that out sue herera, thank you. still to come, we continue to watch what's already been a busy day for earnings. one of the biggest movers of the morning, netflix tech investor dan niles joins us on why he is shorting the stock today. "squawk alley" is back in two. the dow up 37. stay with us or trips to mars. no commission. delivery drones, or the latest phones. no commission. no matter what you trade, at fidelity you'll pay no commission for online u.s. equity trades. but when i started seeing things, i didn't know what was happening...

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welcome back to "squawk alley. coming back to netflix, one of our guests is shorting the stock. dan niles joins us on the phone. also with us, business insider henry blodget. good morning to you both dan, i'll start with you why are you shorting netflix >> well, i mean, look at over the next year and what's happening, there's four different companies all with strong cash flows that are coming out with their own services, disney, apple later this year, and then you've got at&t, hbo max, comcast peacock service launching their own streaming service as you look into early next year.

you look at netflix, there are several issues, but they missed subscriber numbers in the june quarter, missed them again in september they reported, and you haven't even had the competition come out yet with their products i think we can all agree that the four that are coming, they all have not only big cash flow streams, all have in different ways good brand recognition for their products netflix is going to have a lot of competition for subscribers that's going to be a real problem going forward, and costs are going up underneath all this, where because these guys are all launching their own programming, the costs are continuing to go up. at the same time, there's a lot of price pressure. you look at apple, you get the apple tv service free when you buy a qualifying device. you have pricing pressure down, costs going up, i don't think it

is a great situation for netflix. burning 3.5 billion in cash flow this year, will have a tough time next year as well >> henry, i think with all of the competition coming online, it begs the question whether the u.s. market tapped out, especially when you see changes coming to how they'll report u.s. subs and fold them in with canada, right? >> u.s. market seems to be maturing, no question there. one thing netflix did that surprised people is be successful internationally one of the questions i had for dan, whether the short call is just a short term six month let everybody pile in the market, scare out everybody in the stock bottoms, or do you think the stock is done, have we peaked forever? >> yeah, i think when you look at this, this is obviously an evolving story, the way i look at it is the following you've got four very big, very strong cash flow generating companies that are coming into

this space i think we're not going to know how the environment looks until the last guy, which is probably comcast, launches a streaming service sometime in the first or second quarter next year and you know, henry, it is not necessarily numbers, it is the multiple you are willing to put on numbers that changes valuation. netflix for me, it is my guilty pleasure i love netflix, whenever i'm having a bad day, love to binge watch. having said that, a great product doesn't mean it is a great stock, especially when you're in the situation where there's pricing that's going to be continued to push down. apple saying hey, you get a free tv service if you buy an iphone, that's not great, you're competing against zero and apple generates a ton of free craash flow for us, we own apple, google, facebook, we bought roku late september, early october which i think they're going to really

benefit, apple tv service is going to come out on roku devices as well as disney services, so for us, this is a nice wear to pair things up. netflix is a great short for us last year actually, great short for us this year already, and so for us it is a portfolio, and i think it is going to underperform and think it is going to go down it is not necessarily a forever call service is not going to zero people are going to continue to watch it i think you brought up a great point, henry, internationally there's more room to add subs. all of these companies at some point are going to be competing aggressively internationally as well >> what do you think, henry, about the international play ground they had domestic mostly to themselves awhile, had international in a sense for awhile now the discussion is sub quality internationally. >> i think there's a lot of room a lot of people in the world, 160 million now, by the way four or five years ago, you would

have thought it was ludicrous to say they could get here. there are many of these scares since they launched the streaming service and went from dvds to streaming, stock gets creamed, everyone decides it is over, then they come through it. that's why i asked dan the question i think another question for dan is how big ultimately is the global market opportunity for netflix? can this company have a billion subscribers at some point? if they can, okay, then there probably is a lot of room to run after this if you cap at 200, 250 million, you can say okay, we're probably done >> dan, i have a spin on that question, because a big part of netflix's story is localizing content language wise internationally, but seems to me disney already has content that plays well globally. is netflix in position where it will cost them more internationally relatively speaking and the likes of disney will be able to expand and compete on a different basis

>> jon, a great point, one that i'm very focused on is the cost side of the equation one thing i look at is netflix does a fantastic job in terms of putting out a letter that talks about their outlook. what i found interesting is if you look at the june letter, there's a sentence in there that says we have a clear path towards positive free cash flow. this september letter says as we move slowly towards positive -- toward free cash flow positive it is a subtle change, but goes to the question you just asked disney as you pointed out has a massive international presence they don't need to pay to advertise internationally, people are running out, watching

avengers netflix's case, they have a longer road to go to advertise to get the same kind of brand name recognition that you rightly point out disney already has. so this is not the right analogy. by the way, i love netflix as a company. but you look at the cash flow side of this equation and that's what should concern people because as we saw with other companies, uber and lyft that came out, we shorted both those stocks the moment they came out on the ipos, we looked at it, he said you aren't generating money, that's not clear to me they'll ever be able to generate money when self driving cars come out that's a similar issue i have with netflix, which is they're losing 3.5 billion in cash flow this year, they have to spend more to compete against the likes of disney as you pointed out internationally. that's where i think things start to get more interesting. and great markets like india, huge opportunity, the price point is a lot lower than it is in the united states just because of the poorness of the

country. those are all of the pieces that i'm watching this is going to take a long period of time to play out, but the next 12 months is when it is probably the ugliest as the four come out with competing services. >> one last thing, henry when you look at just content and names that netflix is still assembling, the obamas or martin scorsese, are they responding to the paycheck or we want to be seen, think this is the best place to be seen >> i think both, and freedom on top of that. you've had top producers come out and say listen, it is getting restricted by the network, the studio, i have more creative freedom, do what i want i think there are a lot of reasons to work with netflix i think again, 15 billion on content shows the power of the model. go back five years, the idea that netflix would spend more on content than any of all the companies we talked about, be

able to do it sustainably as long as they keep growing would have been an astounding prediction, and here we are. i think that lends itself to the case this may be just a one year scare and then we go on from there. but things have changed. the market is more penetrated than it was, dan's arguments make good sense. >> great discussion, gentlemen thanks for joining us to have it on the heels of earnings dan, henry >> thank you. when we come back, big blue is pretty blue, although just off session lows we breakdown ibm results stw up 21. ju south of s&p 3k access to res. yep, td ameritrade's got that. free access to every platform. mhm, 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. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. now offering zero commissions on online trades. we charge you less so you have more to invest.

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here's what's coming up top of the hour. what netflix means to the faang. and we're about to see the golden age of banking. and pharma stock that was pounded. why it just got upgraded, all at noon jon, about 15 away looking forward to it. we're talking about ibm which i know you're going to hit right now. >> right now thank you, scott ibm moving after earnings. revenue fell short of estimates. the company reports a fifth consecutive quarter of declines in sales shares of ibm down 5.5%. the global technology services unit did a bunch of damage 37% of overall revenue was down

4% quarter over quarter. red hat, the big acquisition that recently closed did pretty well, up 20% the question is how quickly ibm can move into newer businesses as old ones deteriorate. quarter by quarter issues. new mainframe out, one week sales of that in the quarter, if that's a big seller, you get more of that icn the next quarter. when does it balance out, when do you see revenue growth. when do some acquisitions and strategy shifts create a trajectory investors can follow. >> ibm has a specific company story. given this theme out of earnings about the macro backdrop, how

companies are navigating slowing global growth, union pacific, honeywell, for example, is this something that plays or factors into ibm as well >> has to. a big part of ibm's business that's not growing much is more traditional it stack if spending slows into the beginning of 2020 as people expect, that's what's going to be reflected in areas like global technology services, analysts pointing out this quarter germany and uk but you can see these things crop up here and there, if overall there are issues >> all right meantime, perhaps most important element of the u.s./china trade fight that isn't getting as much as it deserves, rare earths. brian? >> reporter: here's why, i am going to ask you deeply personal questions. are you ready? do you have an iphone? have you heard of iphone have you ever had an mri heard of tesla model 3

guess what those things have in common the parts, key magnets that make those things function, guess what, they come from this mine that's right this mine, 60-year-old mine in mountain pass, california, 400 feet deep. that provides a huge global source of neodim yun there are five rare earths, i can't pronounce half of them but if you want to have all of the new magnets that run this technology, you need rare earths most is coming from china, guys. china, supply and refining, you have to refine it down, they control 90% of the market. guess what, mp materials reopened this mine, bought it out of bankruptcy, they hope to kick start a u.s. air earths revolution how did they do that there's two points you have to get it out of the ground then take the stuff, griennd it

into a fine powder then you have to refine it unfortunately, they still have to ship to china from california to get it refined, a variety of reasons, environmental sensitivity, regulations, lack of supply chain. they have a refinery they open to open by next year to get the entire u.s. supply chain going rare earths, you may have heard about them we came in to show viewers where that tesla motor, the magnet that makes it run, comes from. we also had a little bit of fun. there's some big heavy equipment there. even with high tech stuff, sometimes you've got to resort to good old fashioned explosives check this out remember, morgan, last week i said i was going out west to the mine, trust me, the show is going to blow up that's what i meant. you want this high tech stuff, want to be environmental, be

green, drive electric cars you're not getting any of that without the rare earths or putting heavy equipment or tnt in the ground. >> definitely staying true to your word, brian the live shot of the day a lot of military applications, too, a half ton of rare earths into every f-35 fighter jet made as well. brian sullivan, thanks for joining us. when we return, the sec pushing the t mobile sprint merger through what comes next? brendan carr joins us after the break. devices are like doorways

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the sprint/t-mobile merger gathering light from yesterday now turning to the multistate lawsuit, the $26.5 billion deal. joining us with more commissioner brandon carr. commissioner, thanks for joining me >> thanks for having me on >> you believe two competitors in this space is better than one strong and one limping along how long can the court afford to wait before this gets decided one way or the other >> i think you're exactly right. when you look at the transaction or our review with the fcc or as you point out the democratic ag, it keys up two fundamentally

different approaches to technology one i think is very backwards looking that operates to preserve the status quo. i think that fails the gretzky test when you look at where the hockey puck is today and where it's going on 5g, i think we should embrace this disruptive new competition, seeking to preserve what we have today is one of my colleagues at the fchlfcc, we've already seen the golden age of wireless i think has it backwards. i think that's like living in the era of 4g and flip phones and real phones. and putting this deal puts us on a clear path to getting there. >> give us an update where we stand, the u.s., when it comes to 5g, are we in the competitive position that we need to be, what need foss happen over the next 12 to 18 months

>> 5g is a great job story and a great economic opportunity and the trump administration and those of us at the fcc has positioned ourselves to lead the world with leapfrog competitors for the year that's one lens that i view this transaction through. by approving this deal we have a commitment for 5g for 99% of the u.s. turning this deal away would mean we don't get that accelerated 5g buildup for rural america, in particular, that would be a huge loss this is the fastest clearest path to closing that divide. making sure every single person in the consumer in the country gets 5g. >> i want to go back to what some of your assenting colleagues have said with the merger they argue that the merger is going to drive up competitions and stave off competition.

and they've pointed to examples of that. what makes you certain that's not going to happen? >> as one of my colleagues pointed to sprint and said that sprint had announced some 5g build before this transaction. well, if you scratch below the surface of those announcements, it's a limited 5g build and companies and no plan to go beyond that. they stabilize a number four because there isn't a fifth nationwide provider to fall behind so if you step back, a lot are focused on 5g builds in big cities those are places that get 5g no matter what we do with the fcc or this litigation but if you look at rural america, what's your plan, what's your path to building in those areas? this transaction gives the scope and scale, and frankly, once we started to have a strong third competitor to a new waive of competition that's going to

benefit americans. >> finally, commissioner, i think you have seen the tweet with china, if this is the way china uses leverage over basketball imagine what would happen with the 5g infrastructure here. would we be notably harmed if we didn't have the advantage of chinese technology >> i think that's a great point. fcc was wondering whether toal allow funding of huawei equipment and whether we should take equipment out of the network. i think the chairman nailed. there's a lot of people that say the laws in china don't expressly allow them to use the huawei equipment for spying or nefarious purposes there's been some disagreement with that but with the nba, it shows how china can leverage all sorts of different levers to exert and have people toe its own political line so i think that's a threat that the same type of influence can be exerted through chinese-owned

equipment in the u.s. market, which is why we're taking a close look at the ftftc to do that >> thank you for joining us. the dow crelyowisurnt dn seven points "squawk alley" is back in three minutes. woman: my reputation was trashed online.

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in just about two hours facebook ceo mark zuckerberg is expected to deliver a, quote, unfiltered take on free speech at 1:00 p.m. eastern time this afternoon on facebook live interesting thing, he's in washington having discussions at large. as a tweet out of georgetown, a picture of the students lining up to see zuckerberg but he has in his post hinted this will be his most expansive comments about free speech so far. >> q & a will be interesting because in this era that zuckerberg has helped create free speech has come up like never before >> yeah, and basically warrants fair warning this has been something he's been working on for several years now. and he expects this to be a lengthy address. it's also interesting because usually he puts it out on a blog

post on facebook the fact that it's live is definitely going to be one to watch. >> meanwhile, we don't see decent earnings. until we get to the end of the week we'll keep our eyes on zuckerberg's comments. for the time being, let's get to the judge. thank you, scott wapner front and center, can the company spark a return to one of the markets most popular trades. netflix is out of the way but should investors chill what's in for amazon and alphabet the stock has rallied maybe it's time to start betting big on the big banks. teva pharmaceutical surging but the stock is still down more than 40% this year is the bottom