hey everybody, welcome to "power lunch" for a wednesday. long side kelly evan, i'm tyler mathisen. coming up, earnings and the economy. the fed just releasing the beige book on economic activity. we will have the details shortly. steve is studying it right now. tesla and netflix reporting results after the bell. those are big numbers and we'll get you set for both of those reports. plus the biden administration announcing $3.5

billion for various projects to shore up the energy grid, this follows a $7 billion investment in hydro again and we'll talk to the energy sent jennifer granholm about that and more. and the markets have seen big fluctuations. we're off session lows. the dow down 178. we hit the session lows right around 1:00 p.m., improved a little bit after the better 20 year treasury auction, and then started sliding before we stabilized. the s&p is down 35, nasdaq down 1%. and bond yields have been moving hire of course until that auction. nvidia shares, down again today. down nearly 10% in a week now, $100 billion in market cap wiped out. both citi and mar organ stanley cutting their price targets. and we start today with the markets. stocks falling as hire rhigher

raits way on the market. the 10 year above 4.9% and that is happening as earnings season cooks up. let's bring in our chief investments officer. can concentrated u.s. growth continue to grow if interest rates continue to rise? >> absolutely. we're looking for companies that have real great secular growth drivers as opposed to cyclical growth drivers. so our entire purpose is to get through tougher environments. so we're not worried about what is coming given what we own today. >> and where are you finding those opportunities now? >> abbott is a great example. they reported strong earnings this morning. the fear around the stock had been their drugs but we think it is an opportunity and not a risk. the rest of the base business continues to be strong.

and so abbott is an example. adp is another. in terms of what they do with payroll processing and if rates are hire for longer, that means great things for float income which will drive more and more profit to the bottom line pen. >> yesterday there was a sense that bond yields were rising for the good kind of reasons. the data was better than expected. i think it was retail sales. industrial production. today i'm not so sure. is this a bad kind of rise, is it driven by -- you tell me. and so how important are figuring out these moves to the direction of the stock market and to the rest of the year? >> it sure feels like we're at a relative peak on rates, the economy even though atlanta fed gdp number is very strong, it doesn't feel and you saw the beige book, doesn't feel like things are accelerating. if anything we're seeing signs of weakness out there. so i think that rates are tough. when i look at equity multiples where they are in the high teens to around 20, that doesn't feel

overextended but again, it all comes back to earnings. if you can find earnings growth, those stocks will do fine from here on out. >> and forgive me for asking this again. if i hadded t edtold you a year bond yields would be 4.9, almost 5%, would you have suspected that stocks on the s&p would be where they are today? >> i don't think you would have thought that as a whole for sure. but i think that you have to disaggregate the magnificent 7 and their impact versus the broader market and the reality is the broader market or the average stock is flat this year after being down a lot last year. so i don't think that the average stock has done nearly as well as the indices. >> so how healthy is the stock market overall? >> i think the stock market is fine in terms of when you look at where earnings are and particularly a number of companies that can do well here. i'm not worried about the

celebrity secular growth. i think that the risk is for the companies that will have disappointments and the broader market might have disappointments. so you have to be selective. >> that wasn't a land line, was it, jim? >> i believe it was. >> that isis a throwback. jim, thanks for your time. we appreciate it. >> thank you. steve liesman has been pouring over the fed beige book. let's get to him for the details. what are we learning? >> more like speed reading rather than pouring over it. little to no change. consumer spending said to be mixed to improved, but some are reporting a slowing in consumer travel and yet uptick in business travel in a few districts. there was a modest decline in loan demand at banks. rates also said to be slightly increasing at this point. and multiple districts report improving outlook in the manufacturing sector.

and i'll say that these economic anecdotes may take on more added importance because it seems like more and more fed officials are relying on anecdotes rather than the data. data has been strong, but seems like the anecdotes seem to be a bit weaker. outlook for the economy is generally stable or slightly weaker. holiday shopping krouts said to be mixed. labor market continues to seize with improvements in retention. less pushback on wage offers. but employers continue to have to modify the contracts to offset higher labor costs including offering things like work at home and lower signing bonuses. prices increased at a modest pace. input cost slowed or stabilized. again, good inflation news. input costs are still rising for services something the fed has been watching carefully. and sales prices are increasing at a slower rate than input prices. that is a margin story there. businesses are struggling to pass the costs along.

and firms expect price increases to slow or to come into slow rate in the next several quarters. and i'll leave it there, but want to emphasize even waller out there talking like you know what, the data seems strong, but our outlook is really for the economy to slow down and this is a lot based on the anecdotes they have been hearing from different business contacts of theirs. >> so net it out for us. any change that you would glean from this or officials might glean as they try to figure out whether we need for instance another rate hike? maybe in the next couple week or maybe before the end of the he year. >> no, you've got the whites in the washing machine, now let's throwhe year. >> no, you've got the whites in the washing machine, now let's throwe year. >> no, you've got the whites in the washing machine, now let's throw year. >> no, you've got the whites in the washing machine, now let's throw stripes into the hopper there as another piece of data that is out there. and remember, i think that the operative phrase or what we'll hear tomorrow from powell is a message of patience. so now we wait to see does the data begin to reflect the slowdown that we seem to be

hearing in the anecdotes. because we've done nothing but mark up the third quarter and even a little bit the fourth quarter because of the strong retail report. >> yeah, weakness showing up kind of in front of me, but not in the data yet. so who knows. steve, thanks very much. let's switch gears and talk earnings with tesla set to announce third quarter results in a couple hours. investors are muted. shares down about 4% this session. earlier this month tesla said its deliveries dropped 7% quarter on quarter. but that they still aim to keep annual target deliveries of 1.8 million vehicles for the full year. here with us onset is global autos analyst for rbc. i know it is a busy time in your space right now. between everything going on with the big three and now tesla. what is your feeling going into the earnings this afternoon? >> obviously expectations are pretty bad, pretty low. they lowered the delivery

number. a lot of that had to do with production cuts that happened and they did telegraph that. i do think that consensus numbers may be a little too hyatt -- high at 070.7. but i think that the number should be on the 4 q number and whether or not they can hit this 1.8 million number for the full year. >> it is a stretch goal, right? >> yeah, that would mean they hit 470,000 plus. i think a lot of -- >> have you ever hit 470 before? >> no, 460 was the clothes two quarters ago. >> so they need to hit the 470 number to justify the current price? >> just to hit the 1.8 million that they targeted for the year. but i actually think a lot of investors are missing the plot. i think they are focused too much on the car business. this is really a company i think that is pivoting to become a

tier one supplier. ultimately a winner in autonomy. elon says that on the conference calls past two calls. ultimately that is the goal. >> before we talk about the kind of big picture autonomy goal, the supplier part is really interesting. just explain that for a second. what role do you think they could end up playing in the auto market? >> absolutely. we all know about the charge infrastructure. incidentally today bmw announced that they are joining it. they had been loud saying they would never join it. almost like a prisoner's dilemma. and now after that, there are batteries. 200 cable wat ht hours a year. all subsidized -- >> other automakers as well? >> well, initially their own production. but 3 million incremental cars on top of what they are selling. we'll see if they hit that. probably i think what they will do is sell those to other car marks. they also do power electronics.

>> is that good business? i find this angle fascinating because they have the capacity and rest of the industry desperately needs these products. what would it mean for the business model compared with what they have done over the past decade? >> it is not the most profitable business, but i don't think that is the goal. the goal is for lack of a better word trojan horsing into the oems. once you get in the door and some of that is software, now you can get in with what you really want, what is licensing fsd, which is the real money maker and which will expand the entire -- >> fsd meaning what? >> their term is full self-driving. but it is really a level two plus product where you drive where your eyes have to be on the road but your hands off the wheel. but it is an incredible product. only probably happens around a 5% take rate of tesla's.

we think that they will lower that price, get an increase take rate and everybody will see how profoundly amazing the product is. >> right now about $16,000 or something like that if you go with the full service drive? >> it was 15 and they dropped it to $12,000. but they will drop it even further. that is about $200 a month. >> and so on the charging point where so many people are switching over -- or accepting the tesla standard, what does that do to the other suppliers in that area, the charge points and others, ez go or eb go or whatever? if i'm one of them, i'm getting out of the way. >> it is probably optically negative, but let's not forget we've seen a slowdown in ev demand lastly and a lot of the reasons that consumers have pointed to is a lack of adequate public charging. so honestly, this is a rising tide lift all boats. there is a lot of charging infrastructure that needs to be built in this country and we think that there is probably space for everybody. >> interesting. all right.

fantastic. >> and so tempted to ask you about the latest on the strike front. any comment there? we were talking so much about tesla. and it comes at the time the big three are on the back foot. >> yeah, it is interesting. i mean, it is a lot of news. the incremental thing actually was -- interesting stellantis actually postponed their appearance or canceled their appearance to ces, which i found interesting talking about uaw, that is in january. and then gm canceled it kcmd wh is supposed to be november 16. so that would suggest maybe this is going longer than people expected. but i don't think that that is happening. both sides have moved closer to each other. the one in for 20 19 was six weeks. we're in week four of this one. i feel like it will be resolved. maybe it goes beyond six weeks. but to go into november and january, i don't see that happening. >> tom, thanks so much. and coming up, three power

players, first we'll hear from a prominent israeli tech entrepreneur and the founder of the gps app waze. and then we'll hear from the ceo of dropbox about the role of ai and the future of the cloud business. and finally we'll talk about the state of the oil market and america's energy grid with energy sent jennifer granholm.

welcome to ameriprise. i'm sam morrison. my brother max recommended you. so my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors, the garcias, love working with you. because the advice we give is personalized, hey, john reese, jr. how's your father doing? to help reach your goals with confidence. my sister has told me so much about you. that's why it's more than advice worth listening to. it's advice worth talking about. ameriprise financial.

as fighting continues between israel and hamas, president biden visited tel aviv. biden saying civilian lives must be protected and also said israel has agreed to let humanitarian aid from egypt to enter gaza. as the war drags on, what does it mean for businesses and entrepreneurs in the region? joining us to discuss is co-founder of waze, the 3maps unicorn. he lives in tel aviv and is joining us today from madrid. good to have you with us. what are you hearing from the people you know in your

businesses or in the country of israel right now about what things are like there? >> thank you, appreciate the opportunity. let me start by saying that this is terrible event, right? the terror attack when you compare the order of magnitude relative to the population of israel, this is like ten times bigger than new j9/11. and it was really amazing barbaric attack. they killed women and children, elderly, they murdered like everyone that they met. and for a send i would say what would you do if that would happen to you? because this is exactly what israel should be doing. israel should be eliminating the hamas. and at the end of the day, making sure that there are no more terror attacks on israel. but in general if you look at the situation in israel, let me say the following.

so hard time breeds from people. strong peopler create good times. unfortunately good times will create weak people and weak people will create hard time again. it is hard time for israel. that will create people in israel which is the secret sauce, the strongest part of israel is the people. and they will make them stronger. and the ecosystem, startup e ecosystem will become way better than before because what we are seeing today is that many of the startups, they are already happening. people are being drawn to it. some are volunteering to help all the people that actually need help. and this is the spirit of israel. this is going to prevail at the end of the day. and will make the ecosystem stronger. >> so you raised an interesting point that i was going to ask about, and that is how do businesses function or is it kind of a suspended function

when 300,000 plus individuals are called up do their patriotic duty and serve in the reserves. those people are coming out of the general economy i suppose for the most part. how does business function under these circumstances or is it not able to? >> so i think that one of the strongest point of the israel ecosystem is the loyalty of the people. everyone realizes this is not our time and many employees are being, you know, thrown into doing their, you know, military duty. and everyone else is taking care of pretty much everything. so our people are working as hard as -- way harder than before in order to make sure that the business partners and the customers of many of the israeli startups are not being affected.

now, is that 100% bulletproof? probably not. but later, it will be way stronger. >> tell us about what you are hearing when you have conversations with either family members -- you are in madrid right now. what you are hearing in the conversations you have with fellow businesspeople, family members, customers and the like of your various ventures. what are they saying? >> obviously there is a concern. but most of them realize that, you know, the war is not going to last forever. it will be for a limited time and after that, everything will be way stronger and way better than before. so this is what i'm hearing from customers or investors. from ceos on the 10 different startups that i currently have, what i'm hearing is that everyone is on the same page. we have going to fight hamas like there is no other business. and we'll continue our

businesslike there is no hamas. >> uri, thank you for your time. my wife has a saying as we drive around, in waze we trust. uri, thank you. >> appreciate that. and further ahead, building the dream stream. netflix is set to report after the bell. once the king of streaming, but is it now just another player in the game of clones. which platform has the best library and best oorniespptuti for investors. we'll lay it out next. ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia.

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welcome back to "power lunch." i'm kristina. here is your update. new details this afternoon into the deathholloway. the long time suspect admitted that he bludgeoned holloway to death with a cinder block on a beach after she turned down his sexual advances and he then took her body into the ocean. this was part of a plea deal related to extortion and fraud. donald trump was told to keep his voice down by the judge after he grew annimated at his civil fraud trial in new york. the directive came as a witness

testified against the former president and he spoke loudly to his lawyers according to the associated press. and lionel messi is by far the heist earning major league soccer player. the mls shared the soccer star earns $20.4 million a year on the inter miami sxwquad. that is more than the entire payroll of all but three other mls teams and $5 million higher than the next highest paid player. chump change, right? >> what he has brought to the league is worth a multiple of that. i am -- >> can't put a price point on talent, right? >> no. ahead, headwinds are mounting to offshore wind. inflation, interest rates. but one project is moving forward with a federal funding boost. cnbc going inside dominion's offshore wind project. we'll take you inside as we trace the money trainel xt.

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the federal government pouring money into alternative energy projects including a big wind farm planned off the coast of virginia. the project from dominion is

getting a boost from government incentives. and we sent pippa stevens to virginia beach to get a firsthand look there. >> reporter: i'm still getting used to being back a dry land. we spent all day yesterday on a boat touring the company's offshore wind farm just 27 miles directly behind me out to sea. and right now, there are just two turbines in the water. but eventually there will be more than 170 each over 800 feet tall supplying power for some 660,000 homes. now, this project takes highly specialized quimgt d equipment manpower all of which is expensive. total cost is $10 billion but the "inflation reduction act" provides about $3 billion in tax credits. next phase of construction begins soon. the foundation that supports the turbines are on their way from germany as we speak. dominion relies on european suppliers right now because domestic supply chains for

offshore wind don't exist today. but their ceo said the project has the potential to change that. >> these suppliers have been looking in the united states to expand their facilities so take those existing designs and let's start building them in the united states. so it has to start somewhere and this project is one of the key projects that they are looking at. >> and eew which makes the dominion foundations have already broken ground on a new jersey factory. and being out on the water and seeing this project up close really gave me a new appreciation for the massive capex massive infrastructure that these require. >> so you said these towers are some 800 feet tall. does that include the portion that is below the surface of the water? because to be honest, that does not look like it is 800 feet tall. >> so the one you are looking at, it can be deceptive because

there is nothing around it. that one is 600 feet, that is more than two statue of liberties. the new ones will be 836 tall, that is almost as tall as the eiffel tower. and no, that does not include the portion under water. you have to remember the sea out there is about 85 feet deep and it is drilled in to the seabed. so once you add it that, we're talking taller. it is hard to gain perspective, but take it from me, they are huge. >> and one other quick question. how does the electricity that is generated by those wind turbines transfer back to land where it can be used and distributed? >> so out offshore, 176 turbines are out there, they will be grouped in to smaller groups and then the cables will run to a central substation, there will be a few of those out in the water. and then a cable will be laid all the way down back here to virginia beach by a european based company. and they lay the cable, run it

to a substation and then it goe. >> you can see the turbines from shore? >> if you squint from high up, you can see them at certain lights at dawn and dusk. earlier today our cameraman, van, very skilled, he is now zooming in, you can almost see them. but they are not disruptive here. and the sound they make is really not loud. it is a subtle whoosh. i could barely hear them when i was only slightly away from them on the boat. >> fascinating. pippa, thank you so much. really appreciate it. from wind farms to grid strength, big projects are moving forward to help power america and its energy transition. earlier this afternoon, the biden administration announced that they will invest $3.5 billion for 58 projects across 44 states to strengthen electric grid resilience and reliability across the country. for more, we're joined by the

secretary of energy jennifer granholm. mrs. secretary, thank you. >> thank you. >> explain the significance of the investments that you are making, is this a national security concern or is that because the load on the grid is changing so much amid the strans si transition to renewables? >> all of the above really. so much was built long ago and it is not reliable in many cases. so there is a question of reliability, of old transmission and distribution lines, of old poles, old substations. and then there is also a question of how the grid will withstand extreme weather events which are increasing. so we want to make sure that it is not vulnerable to that, dhou we make sure the grid is not vulnerable to wildfires. and so all of that has to happen. and then how do we make sure the grid is big enough to be able to encompass all of the energy that sk added as we electrify our

transportation system for example. so all of that has to be bigger, it has to be stronger, it has to be smarter. >> and the main can't omplaint typically about red tape. we've heard in some case it is could take 8 to 10 years to build out new power lines for example and just getting through the regulatory process is possibly the biggest headache or road block to further investment. >> yeah, every one of these 58 projects has a community benefits agreement meaning that the community had to be engaged. and we're taking down the cost for people. so that power is delivered in a more affordable way. so there ais huge buy-in. and this is the largest in investment that the united states has ever made in the electric grid. d it is $3.5 billion of public money but it incentivizes another $4.5 billion.

so $8 billion total in this one announcement. but this is only the first step. we'll be doing it again, odd round of grid enhancing grants that will be award and open for competition. because these are all competitive grants, before the end of the year. the competition ensures that the bids that are selected, the projects selected, have the community support. and have the buy-in. >> madame secretary, forgive me for asking what i'm sure is a naive question, but in reading the announcement today, just on pagen would, there are four references to the phrase "good paying union jobs" that doesn't even include references to labor union partnerships or the ibew. i wonder why you feel or the administration feels that it is so important that these jobs be union jobs as opposed to other kinds of jobs and why you feel that it is so important to mention good paying union jobs

so fromequently even just on pa one. >> the president is the most pro union president that the nation has ever had and he strongly believes that the unions built the middle class and middle class built america. so making sure that labor is a partner in these, plus labor has the expert tease. the ibew know what they are doing when it comes to the electric grid.tease. the ibew know what they are doing when it comes to the electric grid. that is why 75% of the grants awarded today have ibew participation. 84% have labor partnerships. so that is the biden administration is very eager to promote high paying, family sustaining, long lasting jobs. >> secretary granholm, i want to circle back to what pippa stevens just showed you with the offshore wind farms. wind power has stalled out not just here but globally amid higher costs. even dominion is asking for cost increases to help cover the cost of that project. so at a time when consumers are

really sensitive about having to pay anything more out of pocket than they already are, what effort can be made to either bring down the cost of wind power or maybe acknowledge that it won't be able to fill the gap without some inflationary problems? >> well, there definitely is inflationary problems in the projects that we have seen and that is why the atlantic sea board in particular has been particularly sensitive to it. at the department of energy, we are focused on reducing the cost of offshore wind. we have what is known as an energy earth shot which means that we are trying to reduce by 80% the cost of offshore wind. particularly floating offshore wind platforms. but nonetheless the "inflation reduction act" also has a 30% tax credit for building out offshore wind. and that is one way to help reduce the cost. you have to take -- this is the first time we've done this as a nation. europe has done it, they rely a lot on offshore wind. but we haven't. and to the reporter's point, we also want to build out the

infrastructure for the supply chain here in the united states. because that is a huge manufacturing opportunity and job opportunity. but you have to bring down the initial costs and you have to take them to scale. and that is what the "inflation reduction act" is attempting do. we want to make sure the projects are built. the president has a goal of 30 gigawatts of offshore wind in the united states by 2030 and that is what we're striving do. >> the administration also has goals of use or sales of electric vehicles. will we have enough power in this country to power all of the electric vehicles and all of the devices and all the lights that we use and all of the tvs that we have? is there enough capacity? >> that is why we're here in georgia today to talk about expanding the grid. and investing in the expansion and the resiliency of that grid. clearly the grid has to be bigger if we're going to be able -- it is not just electric vehicles. it is data centers and all sorts of growth in the economy. but we want to make sure we have enough power and that is why all of the effort to be able to build out clean energy, whether

it is nuclear or renewable or hydroelectric or geothermal or solar or wind, we want to add those clean electrons to the grid and grow the grid, grow the transmission as well as we electrify. so we're doing everything everywhere all at once to make sure we have a clean reliable grid. >> secretary, thank you for your time today. we really appreciate it. >> you bet. thanks so much. thinking outside the box. dropbox was among the first to lead in to remote work and now it is hoping to make waves in a ic i. we'll hear from the ceo when "power lunch" returns.

we're seeing companies utilize ai to modernize their businesses. how are you seeing that play out? >> we're seeing it in m&a because it is about speed and thoroughness. today you have more data than time. so we use ai to make sure no stone is left unturned. >> what does that look like in practice? >> if you think of target identification, we use ai to understand the full competitive landscape and who is buying who. but it is not really just about acquiring your competitors because your target list given sector convergence takes many different shapes and forms. 2,000 tech deals in the last six months, many acquirers were not tech companies. >> talk about how this is benefiting your clients.

>> it creates greater confidence in the diligence process. we're able to use advanced algorithms to analyze massive amounts of data and that results in predictive findings such as market preferences, future trends and financial performance. these things were never possible in the past. >> mitch, thanks so much for sharing your expertise. >> thanks for having me. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

nvidia shares down 10%, the stock of course an ai darling and still up nearly 200% this year. but is the ai frenzy starting to fade a bit? let's get to deidre bosa in california. >> and i have the perfect person to ask. joining me now is ceo of dropbox. >> thanks for having me. >> as tyler mentioned, some of

the ai halo at least in public markets is starting to fade. you've been a part of that may low as well. dropbox is outperforming the broader cloud etf. and what has been the up take, what are they using it for? >> to solve new problems. last week we launched dropbox dash that does ai powered universal search and new open data. and what we're finding is that in the cloud world, people have issues accessing and finding their stuff. and dropbox dash goes beyond singinyncing your files to orgag everything so you can search all from one place. so we see a lot of excitement around that. >> and when dropbox sort of began, it was a consumer facing company but over time you've pulled in more enterprises. have your ai tools allowed you to broaden your reach in the enterprise space? >> yeah, because companies of all sizes are figuring out how

do we make ai useful, how do we deploy it securely because of the privacy and a lot of basic considerations. and then we find that everyone has a need -- tools like chatgpt are powerful but there are questions that chatgpt can't answer. it is not personalized, not connected to your stuff. so we see a big opportunity for dropbox to destroy that for enterprises to make their data useful and engage with it conversationally, things like dropbox dash enable that. >> and some of the mega caps are well capitalized and also have a large consumer base of customers building similar products. why should someone use your platform? >> we're platform agnostic. certainly true there is a lot of different ai functionality being built, but typically siloed. like a lot of different agents and none of them can really access the bigger picture. so that is what dropbox has done since the beginning. we've helped organize everything

across all platforms and devices. >> ag nostic is the key. it is still early days, but what are you seeing in terms of i.t. spend? companies using your ai tools, is that on top of i.t. spend that they are already doing or is it in addition? because gartner had some t estimates that we won't see overall spend grow, it will just shift. >> i think two things going on. first companies are finding ways to do more with less. and being more efficient with spend in all kinds of ways. that is happening certainly the last year. and then secondly, companies recognize there is a lot of potential to unlock with ai and can make their team a lot more productive. and it is a lot more efficient and cheaper to give people super powers with the apps than growing your team. so both things are happening. and it will take a while for ai to show up in the p and l.

>> we look forward to checking in with you again in a few months. back to you guys. and hollywood is short on fresh content thanks to the actors strike. that means a lot of reruns of old shows. so which of the streamers has the best library to fall back on during these hard times? 'll debate when "power lunch" returns. (adventurous music)

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welcome back, everybody. netflix kicks off media earnings after the bell today. and as the actors' strike rolls on, we will see which streamers and their libraries are best positioned to keep viewers watching. who is best in shows? we're joined by our show watcher, shawn mcnulty, creator of the wake-up newsletter and our stock watcher is michael morris, an analyst at guggenheim securities. shawn, let's start with netflix, which you say has the best cache of content. what makes it the standout here? >> i mean, certainly the volume, through the first week of october, netflix dropped 120 series, movies and new documentaries and specials this year just in the first nine months. so a volume point of view, no one is clearly near that. they top every chart, the netflix chart -- the nielsen chart this comes out every week, always at the top whether it's

night agent to second quarter like "virgin river" back in q3. the movies this summer was good, so they consistently deliver the biggest numbers in streaming. >> the biggest numbers in streaming. so, michael, does this translate to the biggest numbers for investors? >> it does over the long term, absolutely. we continue to be bullish on the long-term prospects for netflix and really at the core, as you describe, it's best in class content this is a company that sources the most content for streaming. it's a company that sources the most global content for streaming, so they really bring a very broad perspective and a broad selection. and one other thing i would point out about the way people use netflix, some of the biggest hits aren't even netflix shows, shows that have aired on other platforms that never did well and once they arrived on netflix, consumers engage with them, the example of "suits" from this summer.

netflix has the content and platform people enjoy, and that's the reason we're bullish long term. >> so i hear you saying, michael, and, sean, also you, netflix is the go to in this category. michael, what are the telltales on the stock? what do i need to watch there? >> in the near term there is definitely concern about the growth of both members and the growth of profitability. now we, as i said before, we believe in the long-term potential for this company and we're buyers of the stock. however, there have been a couple initiatives the company has taken over the last year to two years, one being initiating an advertising tier, the other being a crackdown on password sharing. both of which were big, important parts of the near term bull case that have been slower to develop than people anticipate. >> before we get to paramount where there's more of a split, let's talk disney which controls disney plus and hulu. you seem optimistic here.

mike, you're a buyer, is that right? >> i am. i have a buy on the stock. similarly we believe in the long-term potential, different from netflix, disney has things they need to work through with respect to what the platform is and what it looks like. nobody denies the power of the disney brand and the disney content and what that can do for a platform like disney plus. but hulu, the ownership there is more fragmented. disney is working through consolidating complete ownership of that asset, and i think that's slowed the development a bit of that business and maybe hindered the potential of what it ultimately can be. so i think first we need to see clarity on the ownership structure, and then we can see if hulu can achieve its goals that really would be to compete with netflix in our mind. >> sean, you think disney plus could turn things around? >> yeah. they just enacted some price hikes up from a financial point of view. they're righting the ship. it's not pretty right now.

they had a huge amount of write-offs the first half of the year. iger has dialed down the content fire hose, if you will. they're still releasing new content but the amount of marvel and star wars series is far lower than in the past, which lowers your cost, helps their financial situation. iger said they'll be reaching a profit by this time next year. they are probably on track. if they can lower the cost of content to a more reasonable level, you can see how that comes together. >> quick thought, michael, would you view a spinoff of abc, the stations, the network, as a stock positive? and what about espn? >> it's a very complicated question. i will try to be straightforward. we first and foremost believe in the power of the disney brand and that includes everything from the disney films and television product through streaming service and the parks.

we are 100% believers in. when we look at general entertainment, and that could include hulu, abc, but it is very intertwined, we do think the company needs to take a hard look how much they need to invent. asset x or y gets trickier because some of that content is intertwined and that makes it very difficult. >> very interesting to learn how you think about it. let's move on to paramount, sean. you say worst in terms of content library. tell me why. >> well, it's the taylor sheridan universe. there isn't a plethora of things from a new content point of view compared to the two companies we just talked about. special ops with nicole kidman did pretty well. they have another taylor sheridan show coming up in

november. against the competition here they're relying on cbs which is now having a strike affected fall so they're not having those new shows come in. they don't have a lot to offer which helps you stand out. >> let's bring in michael. we have about 40 seconds, michael. your thoughts on paramount. >> i think paramount has potential. parm has a tremendous amount of assets in its content library and own pretty powerful in terms of champions league soccer and march madness. they are still losing money on the streaming service. they need to right size the content and then we can see investors get excited about this idea again. >> love that conversation. i had forgotten they have the champions league as well as march madness, the anchor in

that deal. thank you very much. a fascinating conversation. sean mcnulty, michael morris. we'll have you back soon. we're going to have all these viewers back soon. >> we hope so. >> tomorrow. >> first we have to see what netflix does after the bell and tesla. >> "closing bell" starts right now. thanks so much. welcome to "closing bell." i'm scott wapner. in this make or break hour, the first moment of truth for the tech trade. tesla and netflix reporting earnings in less than one hour from now with so many rally hopes hanging on the nasdaq's most important names, and it all comes with the markets, as you know, already on edge. your scorecard with 60 minutes to go in regulation looks like that for much of this day. the major averages in the red under pressure for much of the session as all eyes turn to the bond market, the ten-year yield tops 4.9%, sitting right at that level but we have yields o