tv Closing Bell CNBC October 5, 2017 3:00pm-5:00pm EDT
talent, the cutting-edge stuff in cyber security, the engineering talent, resides in the private sector not to mention that the private sector knows a lot more about us than the public sector does. >> and they monetize it. >> and they monetize it. >> yep. >> exactly all right. thanks, everybody, for watching "power lunch." >> "closing bell" starts right now. i wanted to go back to tyler drinking coffee as an 8-year-old. >> in the second grade, yeah. >> that was the news for me today. welcome to "the closing bell," everybody, i'm kelly evans at the new york stock exchange. >> didn't start cigars until the fourth grade early bloomer. i'm bill griffeth. here we go again another record day for stocks. the s&p on track get this, for its sixth consecutive record close and that would be its longest streak in 20 years >> yeah. >> believe it or not. >> to keep hitting those records right in a row, day after day
after day. >> we will see if a rally can hold into the final hour here. the dow, itself, up 106 points also in record territory. and helping the market today, the house passing its 2018 budget, that's a first step toward getting tax reform done and how speaker paul ryan will be holding a news conference on that very topic later this hour. we'll bring it to you live as soon as it begins. >> the dow up 40 points. when they announced they passed a budget, it was sudden i up 100. it's looking for right now. the amazon effect strikes again. this time fedex and u.p.s. in its sights see both those stock are lower detail on that coming up. we begin with the netflix stock jump today and the company's move to raise the price of its most popular streaming plan by 10%, which sounds like a lot, but it's $1. >> maybe it is a lot. >> well, it could be, but, you know, i don't think it's going to break too many banks. julia boorstin has details for us julia?
>> reporter: that's right, bill. analysts, investors don't seem to think this can break any banks here confidence in netflix's pricing power is driving netflix shares up about 5% today. netflix's most popular standard service will increase to $11 a month. the premium 4k plan will increase to $14. the basic plan will remain at 7 $7.99. saying the price increase will be a revenue growth catalyst for the company, over the years, indicated that content, not price, is the leading return factor among netflix subscribers. today's stock moved higher in sharp contrast to netflix's infamous increase in july 2011 t when it jacked up prices 60% for subscribers for both dvds and streaming. in the quarter following that announcement, the company lost 800,000 subscribers and the stock fell 57% with a total 71% decline in the 12 months
following that price hike. now, netflix handled the price hike two years ago far more carefully raising prices by only $1 with extensive warning. hastings did say the price hike slowed growth in june of 2016. the stock has grown dramatically since then guys, netflix certainly seems to have learned the lesson from the 2011 pr disaster and exclusive content puts it in a stronger position with consumers than six years ago. back over to you. >> that's what the market seems to be saying, julia, thank you very much. nearly 11 bucks for a standard subscription, does netflix have the pricing power? let's ask barton from sbr capital markets, our bull on the stock today and david from new construct who's much more bearish. so, david, talk a little bit about, you know, whether you think this price increase is a smart move by the company and what the risk is >> i don't think they have a choice i think when you look back at netflix's strategy, it's like a shell game you know, first it's about subscriber growth. then it's about international subscriber growth. when that starts going down,
maybe it's about margins about original content, not about original content they lost $4 billion in cash flow last year when you really look at the economic so original content is not a panacea for profits. maybe for a little bit of re knew growth, but i think at the end of the day this business model is continually boxed in, they're more like a tv network, and if they're valued like a tv network, they should be closer to 50 bucks, not where they're trading today. >> barton, you're hardly a screaming bull i mean, i think you've got a neutral rating on the stock. >>. >> right. >> be that as it may, you're not nearly as bullish as david is. what do you think of the price increase and what do you think the resoponse from customers wit ill be >> right on trend of what we were expecting the company to do slightly less than what rbc was saying i have 7% penciled into smi model for next year. i think what's more important for these guys is subscriber growth internationally that's really what's driving the story.
they're very early in their penetration of those market. everything we're seeing is the consumer likes the service, that these guys are going to continue to have robust subgrowth that's a formula for the stock to hang on to the big gains that it's had. >> consumers can be fickle, plenty of rivals, everybody from hul hulu, 10 bucks a month, cheaper than netflix amazon, $8.25. part of amazon prime disney, perhaps, coming around its streaming service around 10 bucks a month in the next few years. is there any evidence you can see that customers are tuning out netflix's content offerings, david? >> well, the landscape is a lot more crowded as you pointed out, kelly, than it was before. i think it's going to be increasingly crowded people are pulling off -- disney and fox pulling their content off of said they're going be like a tv network have to come up with original content, extremely ix pensive
and difficult. i think, look, rising prices does not go hand in hand with subscriber growth, international or domestic. we're seeing subscriber growth rates decline as well. so, i mean, i don't get it i don't see how you can justify anything close to this valuation, if they trade like a tv network, by the way, the tv networks are a lot more profitab profitable, actually make money. if you put them at the same enterprise value to revenue ratio as the average of the major networks, it's a $50 stock. >> barton, i'm not trying to ignore you david, i have a burning question for you, what would you tell reed hastings to do to grow his company other than what he's already doing? going with original content which got him where he's going today and raising prices to raise more money to produce more original content. >> i think maybe he's -- >> what would you do >> i think he's been a victim of his own success. the stock price valuation has pushed potential partners to left raverage what he's done, c disney, from buying them they've been too expensivexpens.
they've been left on an island i think they're going to die on the island. >> barton, what would you say to that >> i think there's anything in the numbers of netflix's success to suggest they're dying they're valued at premium to the traditional tv markets because they're growing. that's where viewership is going, they have more engagement, global platform. the tv networks aren't as global investors want that growth, they want that future i think every investor is looking at the sector, saying, look, in 20 years our kids are going to be watching on demand streaming, netflix is a leader they're not going to be watching the paid tv bundle like they do today. that's why the tv network are on an island. so, i think that the stock action is pretty consistent, and i think there's nothing in the numbers that tells me you're going to reverse that any time soon >> all right, guys >> i just want -- this is not -- we should thank you, barton, david. i wonder, to you, bill, you have a netflix account. is in news on it >> no. i mean, no there's no news.
>> people still -- >> you only want to get a streaming service that has news? you get news on alexa. >> i -- >> i hear they have business news on alexa. >> what's the stock quote? anyway, that's just something to think about. >> we were just talking here, you know, the number of streaming services out there, it looks a lot like cable television now. >> minus the news. except maybe on hulu or something. >> that's coming you may have something there let's talk about the markets, shall we? continues to hit record highs here joining our "closiing bell" exchange, randy anderson from griffin capital. new york stock exchange trader from meridian equity partners, jonathan and rick santelli at the cme in chicago. jonathan, here we go, we in vths monster rally on monday to start the fourth quarter, figured we'd have to take a breather at some point. we haven't looked back, have we? >> we've been seeing that for a while. every time i'm on, the market
keeps going higher and higher. we come up with excuses why the market should turn the reasons are definitely out there. seems like the market shrugs off good news, especially days where there's no news, the market kind of evaporates higher as we're in the fourth quarter, investors are forced to watch this market, right new quarter starting as we get to the end of the year, historically the market moves higher we're heading into earnings season that's going to help we're watching what the fed is saying, what they're doing, headlines coming o oe ining outf washington investors would be foolish to make a significant decision into this market. as it continues to -- i think there's money that's been sitting on the sidelines that's been waiting for a catalyst or waiting for a market move either way. and once they don't see that, they're going to be forced to putting money back into this system here. so right now it's pretty much wait and see what the market's going to do, what the fed's going to do. >> in the morning we get an important piece of data normally, that jobs report for the month to kind of tell us about the trajectory of all this how much can we take from it
given there's going to be a huge effect from the hurricanes and storms that have hit, maybe depressing that number by quite a bit? >> oh, boy, it's going be really noisy. first of all, as long as we come in with a job number sort of before the hurricanes of about 150,000, that would be a great very bullish number for the marketplace. you know what, we're very near full employment. every hurricane ticks off roughly 50,000 jobs depending on the magnitude of it. i look neefor these to take off5 looking for a number of about 75,000 anything that come in between 50,000 and even 100,000 even with the noise is going to suggest the economy is strong. we feel like it's strong, going back to what you talked about before, everybody is looking for growth, everybody is looking for earnings ism stlois strong. these jobs will support strong numbers and consumer optimism looks good right now i'm a little more bullish than i was a few months ago i'm a data-driven guy. >> rick, speaking of the economy, we've had pretty good data this week, the dollar continues higher here especially
against the british pound. that's where toii want to go wi you here what's going on with the pound sterling down to $1.31 right now? >> reporter: it seems as though prime minister may is just not doing any favors for any of the markets right now. and there's a lot of questions to be answered about what's going to happen to the uk. in terms of leadership, same issues maybe between eastern and western europe there's a lot of diceyness there. i think it's going to continue to show up whether it's spain, whether it's the other countries that aren't pleased with brussels you know, this brexit dynamic hasn't gone away it's talked about less, but i think it's festering under the surface. and as far as our two guests, they both said things i so agree with when it comes to jonathan, he's right about the markets. i call it the godfather iii stock market no matter how much investors want to get out, the price structure keeps pulling them back in terms of randy with tomorrow's data, yeah, 50 grand,
75 grand might be shaved off it affords all investors a pretty interesting opportunity a weak number is going to go in stride in the marketplace just like adp, but what if the number's stronger than expected? that could be something to at least consider in your strategy. as i look up at the boards i see almost over 150 in the two year, almost over 290 in the 30 year, almost above the94 on the dollar index. all those are slow moving compared to the stock market stock market's going to hit a certain level with those three markets are going to get much more intense and i think investors should be very patient because when that occurs, there could be big followthrough. >> randy, you mentioned you're more bullish now than a couple months ago would you be buying the whole thing, the stock market, or companies in particular you think are poised to do well here >> well, we -- first of all, i want to comment on rick's comments, absolutely true. i think if you actually see a job number north of 100,000, i think the market will end up
running barring any other idiosyncratic event. we don't really sort of talk about any particular stocks. i would tell you anything that's got strong earnings growth, we have high p/es, on the real estate side, low cap rates look for things that grow earnin earnings, sustain earnings we're fully invested and believe the market has room to run. >> kelly, to say one thing, when we're talking about the jobs numbers, investors love to use weatheras a crutch we use it in snow, use it in hurricanes whatever the number is tomorrow, that excuse is always going to be in. >> you're saying if is low, you think it is bad, that it's just an excuse? >> exactly you'll find a reason why it's bad. >> it did help the auto sales. >> i tell you, you have to -- one way to look at it, all the way back to katrina and rita before it actually turned negati negative, the economy wasn't in near that kind of shape. running about 185,000 over the
last 3 months, should be slowing down to 150. i think this data's got room to be interpreted it will be a fun day tomorrow. >> all right >> 8:30 a.m. eastern time tomorrow morning we'll see what thats. >> i was going to say i'm going to go tinker on bls.gov. pull some of those historicals >> thanks, guys. appreciate your thought on today's market action. news alert on trade, secretary mnuchin. ylan mui stepping in with that for us >> reporter: bill, the treasury office of inspector general found, quote, no violation of law in secretary steven ma mo n mnuchin's request for and use of government aircraft. the treasury watchdog did say there's a disconnect between the records the deapartment submitted to defend the trips and the level of justification that's actually required said in the future, quote, more rigor will be required for those requests the i.g. office reviewed seven trips on government planes including the controversial one
to louisville mnuchin made with his wife on the day of the solar eclipse. it was not to coincide with that event and mnuchin did reimburse the government for his wife's expense pence expenses the report looked at the coup couple's request for a government aircraft during their european honeymoon it found there was concern about the secretary's access to secure communication during that trip and the request for government plane was ultimately withdrawn now the report comes amid heightened scrutiny of cabinet members' travel and obviously led too t the ouster of tim prie this inspector general's report should help clear the air around mnuchin. back over to you guy. >> all right ylan, thank you. ylan mui in washington. fedex and u.p.s. stocks down today on word today that amazon air delivery service may be getting closer to taking flight. what it means for all three of those companies coming up here in a moment. and a new investigation says health insurers may be
contributing to the opioid crisis by limiting access to pain medications that carry a lower risk of addiction or dependence we're going to speak to one leader in the opioid battle coming up. and as always, we want to arroyo rchuto the show via twitter, facebook, or send us an e-mail with your thoughts you're watching cnbc, first in business worldwide
welcome back amazon reportedly testing out a new delivery service uh-oh. to rival fedex and u.p.s amazon shares aft s of 1.5% to. morgan brennan has the details. >> reporter: shares dropping today. on a "bloomberg" report that amazon testing a new service stateside that would bring logistics for third party merchants in house, specifically merchants to sell goods for the prime shipping, two-day shipping, but do it from their own warehouses using carriers like u.p. ss. and fedex what does this mean? u.p.s. and fedex would be handling many shipments but amazon would call the shot and presumably be able to negotiate lower rates. in a statement amazon saying it's using the same carrier partners to offer the program that it's used for years incl e
including u.p.s., u.s. postal service and fedex. addle "we support al of our customers and expect to expand the relationships in the future. the most telling response to this report from fedex, "there continues to be reporting related to network in the transportation industry that demonstrates a clear misunderstanding of the scale, infrastructure and complexity involved in running a global transportation network." therein lies the dynamic, amazon is building out its network to rein in costs and better handle demand surges but only still 3% or less of business for u.p.s. and fedex, mean this has little i want packet on the parcel carriers, at least at this point in time. back over to you. >> good point, thank you, morg morgan let's bring in a couple analysts keith from morningstar is also with us as well. tom, i mean, are we surprised, given the ambitions that amazon has shown in so many other areas
that they would be thinking about this as well, right? >> sure, to me, this is attacking what is essentially the achilles' heel of the amazon business model it's their overreliance on u.p.s. and fedex you had a segment earlier, you were talking about pricing power as it pertains to netflix. these two companies essentially run a duopoly and raised price, essentially continuously, even in the depths of the recession in 2008 and 2009 so to the ex-tempt thtent amazos building out its own first party logistic efforts it, it attacks that cost center and improves their ability to not only have third party unit sales on amazon, which is 51% today, more than 50% for the first time ever in the second quarter, and i think it hits 75% long term but increasingly using their own first-party delivery asset to get those product to the consumer basically attacking the akchil e achilles' heel of the high cost of fedex and u.p.s. >> keith, i'm not used to hearing amazon talked about like a victim here, but sounds like
that's kind of the case tom's making how do you read this >> yeah, i think it's important to frame u.p.s. and fedex exposure to amazon this is a minor correction to the numbers that were quoted in the introduction to this segment. u.p.s. says that no customer constitutes 10% of its revenue, and fedex says no one constitute 3% of its revenue. given the heavy discounting, we're sure amazon qualifies for at both of these companies and the high cost of delivering to residential addresses, we would gauge earnings exposure at more like mid single digits for u.p.s. and maybe 2% for fedex. any discussion here, we need to start by framing what's their exposure tom is right, they do increase their expense every year expenses increase every year and they increase their prices as they're able to every year that's the nature of protecting their business and continuing to reinvest terrific amounts to support such a large network >> keith, though, what's to keep amazon from not just deciding to deliver their own products the
last mile, but somebody else's as well? and, thereby, stealing some market share away from fedex and u.p.s. >> it's a great question i think just to start, by taking some of their business in inhouse that's their own business, that is stealing share inherently from fedex and u.p.s. >> right. >> they've been doing that for some time. i live downtown chicago in a dense neighborhood full of high-ri high-rises i've had amazon deliveries by amazon independent contractors for probably two years thousand. this is nothing new that amazon is staking ownership of its own delivery what's keeping them from expanding it amazon is prudently cherry picking areas with dense delivery, not remote rural location let u.p.s. and fedex continue to serve their neighborhoods. for example, talk a city like milwaukee, maybe amazon owns delivery in downtown milwaukee but hires someone like integrators to do the suburban deliveries where the density is not so high, the economic are not so favorable
other thing from keeping them from expanding are customers does walmart want to hire amazon do the other 20 large e-commerce shippers want to hire amazon to to their delivery? are they skeptical that's going to give too much intelligence to a kpcompetitor, a direct rival, whereas someone like amazon hiring u.p.s. or fedex, there's less intelligence exchange because it's a third party that's not going to compete with another retailer. >> got it. gentlemen, thank you good conversation. we'll see how this works out >> thank you. >> pleasure. >> i imagine we'll be seeing more amazon trucks around the neighborhoods. >> and i confess, i am surprised they are such a small portion of fedex and u.p.s. >> of those guys, yes. >> if you put amazon's market share in those terms, would anybody have regulation concerns i mean, it's just an interesting counterpoint to the huge share of online -- >> bigger impact on amazon than it does on them. or so they would tell us. >> 35 minutes to go in any case. the dow up 100 points on the nose right now as it marches toward 23,000. it's at 22,762 now the s&p up 13.
that's better than half a percent gain the nasdaq up even more than president 51 points. the russell three points higher today. one of spain's largest banks is considering moving its headquarters out of catalonia as separatists and spanish authorities hurdle more toward of a collision over the region's push for independence. we'll have those details next zblrn zblrn electric cars. that's so yesterday. the future, kids, is in electric planes investors are lining up now as the planes look to take to the air. we'll show you coming up win an uncertain world?k predictable income pgim sees alpha in real assets. like agriculture to feed the world. and energy to fuel its growth. real estate such as e-commerce warehouses.
and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over $120 billion dollars in real assets. partner with pgim. the global investment management businesses of prudential. well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. i just saved thousands in less than a minute, i found out how much home i can afford. i like how you shop for loans the same way you shop for flights online. i didn't realize at lendingtree
spain's market rebounded today reversing yesterday's big declines today the board of spain's fifth largest bank is meeting to discuss whether to shift its headquarters away from catalonia and possibly to madrid this move highlighting how companies in catalonia are now taking steps to address investor concerns about the impact of its push for independence. it being catalonia their parliament there in catalonia is preparing to declare independence monday. this after going ahead with a banned referendum, of course, last weekend, that as we all saw resulted in violence and pushed the spanish stock market down as a result >> i'm amazed, personally, just how spain has handled -- i would say how poorly they've handled it, but -- >> it has been a -- >> you look at brexit and say, you
know what, if people want to express this idea that we want to go our own way, they start learning the details of how that works, it might not be so enthusiastic about the idea, but for the spanish government to have reacted by cracking down, violence against people showing up, they have actually made the best possible case against their own, what they were trying to accomplish there so what this move now, i mean, they say they're going to start their own parliament now two huge important major banks who are going to move their headquarters out of the region i don't think that's what would help catalonia long term, but that's what i mean >> but they're forging ahead that's for sure. they got the conviction. >> so is brexit for the time being. >> and the kurds. >> well, that's a whole other -- >> right >> -- story. >> it's all going on. amid all this, imf managing director christine lagarde, a policy speech ahead of the annual meetings next week fo that group sara eisen sat down with lagarde for an exclusive interview and asked her about the key takeaway from that speech. >> i would hope that people understand that they should not
let a good recovery go to waste. and they should take advantage of that recovery to actually drive change that will make recovery more sustainable, more inclusive, and more balanced >> you can catch the rest of that interview tomorrow on "squawk on the street" and throughout the day on cnbc head to our website at cnbc.com to watch the live stream of that speech that she'll make. that's tonight at 6:00 p.m. eastern time and now it's time for cnbc news update with sue herera. hi, sue. >> hello, kelly, hello, bill a senate committee questioning a panel of federal health care officials about ways to fix the opioid epidemic in the u.s. saying the crisis is tearing apart communities and families one senator worried a proposal to repeal medicaid expansion could prevent people from getting help >> the trump administration's interest in repealing medicaid expansion which has been the
critical number-one tool in my state for getting treatment to people and its proposed budget really would undermine our efforts to combat this epidemic in our states. pope francis denouncing how new technologies are making to easier for people to change gender he made the comments to the ponti pontiffical academy for life, the government's pro ethics advisory board, ramping up his criticism that people can choose their own sex. a dare dechl devil motorcyclist back flipped his bike between two barges in london the barges were set 75 feet apart. travis pastrana had only 150 feet to accelerate to take off speed. timed it perfectly as you can see. landing in the middle of the down ramp. whoa don't try that at home that's the news -- >> yeah, right >> yeah, don't try that at home. that's the news update this hour.
>> some people just can't get excited about life in general. got to do something habit thlik. >> you're right. not me. >> try changing the options market i don't know that can be exciting. 30 minutes left in the tradesing session, the dow up 100 points joining me, mark newton from newton advisers. the consumer staples sector which has been going down lately you look a little longer term, you're a little more bullish on this sector, right >> this sector stands out as being attractive i think going into year end. we're in an area in october where historically you've seen a lot of market tops going back over the last 10, 20, 30, 60, 90 years and sentiment has gotten very, very complacent. all of a sudden yesterday, you saw utilities start to act better, now staples today acted very well. you look tat a chart of consumer staples. in the last day or two, you've seen staples get back up above this prior low which is i think important at least on a short-term basis look at longer term weekly charts, you're at a decent area of support very oversold. my thinking is, you know, this
is the worst sector over the last -- >> here's that longer term chart. >> this is the worst sector over the last three months. now you're down to areas that make really decent sense to consider buying, move up in the month of october, that at least should outperform at a time when the market has been going up ndn up and up every day. a sign of waning in technology sentiment has gotten very, very optimistic certainly sli not through the month of october yet for most investors it makes sense to take a look at a sector like this, gotten beaten down, particularly food beverage and tobacco stocks seeing signs of positive divergence, momentum technically, that's important. gott gotten oversold. bottom line for me, it's a great risk/reward to think the sector stabilizes and bounces as opp e opposed to reaching for the home builders here, opposed to looking at technology which has been waning. apple's been down since september. if anything, lthe market in my opinion could be vulnerable the next few weeks there are signs of sentiment
getting very enthusiastic and very complacent where all these -- the riots, all of the hurricanes, everything is done now it's tax reform, it's up, up and away things obviously don't necessarily always move like that as we know. >> not forever or at least it hasn't lately thank you, mark. >> thank you. >> kelly now a major health insurer is no longer covering oxycontin as it tries to help curb the opioid crisis. find out if that could be a new trend from the insurers and if it will actually help. that's next. still ahead, house speaker paul ryan taking cause of tax reform to the people with a trip to a valve and coupling company in chestertown, maryland he wl tinilbeakg questions and we'll be taking that live coming up (bell ringing) so, i was at mom and dad's and found this. cds, baseball cards. your old magic set?
leaving a career to follow a calling takes courage. a personalized financial strategy can give you confidence to take the next step. hi guys! aw yeah! see how access to j.p. morgan investment expertise can help you. chase. make more of what's yours. welcome back cigna announcing that in 2018, it will no longer pay for oxycontin. an opioid painkiller for people covered by their employer's health insurance plans it will, however, cover another painkiller formulation that it claims is less vulnerable to abuse. >> joining us, we're going to talk about this, dr. andrew is co-director of opioid policy research at heller school dr. siayak, university hospital
cleveland. gentlemen, thank you, both doctor, it looks like we pulled you out of surgery to do this. thanks for your time doctor, why are they doing this? they're move from oxycontin, widely followed, widely prescribed, to another opioid. so what's to keep people from still being addicted to this new opioid that they're going to be covering >> well, the new opioid is nearly identical to oxycontin. it's also an extended release oxycodone product and also has tamper-resistant features to it. what's unique about what cigna is doing is they're creating a financial incentive for the manufacturer of this oxycodone product to keep the doses of the drug low so that if -- >> i guess what i'm asking, why couldn't -- >> higher doses --
>> what i'm asking, why couldn't they have done that with oxycodone? >> i would imagine -- >> oxycontin, rather. >> we don't know i would guess that the manufacturer, purdue pharma, may not have been interested in participating in this. manufacture manufacturers of extended release opioids make more money when a higher dose is prescribed and cigna is flipping this upsidedown and creating an incentive for the doses to be kept low >> yeah. >> dr. hiak, what's your read on all this question should note as well, the manufacturer, purdue, has been sued by a number of different states at this point over their cost of dealing with this crisis claiming false advertising on that company's part about how to use these substances properly. >> so, i think in general, we have to look at which patients are receiving these medications. overall, there's very poor evidence that opioids in general are effective for chronic noncancer pain so if this is a
move to limit opioid usage in noncancer pain patients, it may be a good move if it is across the board including terminal cancer pain patients, that may that be a good move. we should have a national policy on this. you know, and it probably should involve regulatory agencies and the ama and other agencies, local agencies, in order to best address this opioid issue in the nation. >> do you appreciate insurance companies telling you which painkiller you can prescribe for your patients? will it change your behavior if there is a financial incentive for the company, itself? that's making that drug? >> so i have to clarify, or prestate that i do not in general condone usage of long acting opioid medication -- if i have cancer pain patients i use long acting, whether oxycontin
or long acting opioid medications. in general, i do not prefer the insurance companies to dictate which medications we use especially for the terminal noncancer pain patients. >> real quickly, doctor, what do you mean by long acting? does it come down to how long a patient is on these substances, in terms of their risk for addiction, or is it about what's in the substances, themselves? >> so, most opioids -- all opioids are short acting on the order of three to four hours what drug manufacturers do is manipulate the molecule with carrier molecules which to make them longer acting and that's how they become nongeneric and, therefore, there can be higher costs for these medications. >> we got to go, but do you think other insurance companies will follow cigna's lead on this and will it matter >> i don't know that this is going to create a new trend. i think it's a creative idea
i don't think cigna thinks this is going to be a major solution. they're just trying something unique health insurance companies can impact this problem because they're paying for the visits where opioids are prescribed often aggressively they're paying for the prescriptions. and they also have the ability to pay for addiction treatment which we need much better access to so i think there's quite a bit health insurance companies can do this is one small move that may be helpful we'll see. >> yes, we will. gentlemen, thank you thank you, both, for joining us. appreciate it. >> thank you >> thank you. 18 minutes left in the trading session here the dow up 100 points. fourth day in a row we've had a pretty good rally here keeping us in record territory. in a day when netflix made headline and saw its striock rie old school tv groups enjoyed a good day on the market one top analyst says these may be the media companies to watch in the future.
well, we'll talk about that coming up. but first, the like of boeing, jet blue and several vc firms are charged up over investing in a plane you can see there that would run on electricity. coming up, we'll see if this is the future of flight ♪ feel that? that's the beat of global markets, the rhythm of the world. for most, the cadence of today. to us, the pace of tomorrow. it's people and machines uncovering opportunity. cloud computing providing endless capacity. blockchain making transactions safer and faster. new markets born where they weren't before.
we are told we're close to this news conference that house speaker paul ryan's going to be holding to talk about tax reform the budget that they passed today, probably get some questions about the gun control efforts that are under way >> you know, if it weren't for the microphone, i wouldn't believe that was the backdrop. >> he's at a factory in maryland today. yeah touting tax reform in that regard so we'll get to that in a moment here. in the meantime, boeing is miking deals in the future of the skies purchasing one company, investing in in another and phil lebeau is very quickly going to tell us about that. aren't you, phil >> i will, bill. let me quickly show you some of the news from boeing today let's start first off with aurora flight sciences this is a company that has been around for some time, specializing in robotic aircraft, autonomous aircraft, aviation robotics. this is a really cool acquisition that boeing has made here we're a ways from seeing a lot of this technology in the sky.
take a look at shars of boeing, let's be clear, boeing along with competitors are moving quickly toward advanced technologies in current and future planes. and speaking of boeing, it is an investor in a company called zunumer er zunumpaero, the company that plans to build this plane. seats up to 12 with a range of 700 miles, 80% lower emissions see the funding by boeing, jet blue, venture capital funds. this plane is scheduled to be delivered in 2022. and what's interesting here, guys, is that this would really be the first hybrid electric plane of some size i mean, yes, we've seen some smaller aircraft for two or four people this is one that could carry up to 12 people and, again, the scheduled plan is by 2022 they think it will probably cost around $3 million, though, exact pricing is somewhere down the road timely, guys, take a look at all the what i would call aerospace stocks they are all at or near all-time highs and it's easy to see why because of not only the great demand that is out there, but some of these investments, they
believe that they're going to pay off over the next 10 to 15 years. >> i mean, i think boeing is up -- you'd think it was a faang stock, phil. you'd think that the biggest, one of the oldest aircraft companies in this country was a hot new technology platform. >> and dennis muhlenberg is quickly trying to position them for these new technologies this is the second acquisition in the last year which has its focus on future technologies whether it's with aircraft that are autonomous, or robotics that can assist the aircraft. that's a big push for dennis muhlenberg and his team right now. >> all right phil, thanks very much see you later. >> you bet. >> phil lebeau joining us. >> let's bring in ylan mui, as we wait to hear from house speaker paul ryan in a couple minutes as he continue to make his push to the people on tax reform >> reporter: what paul ryan is trying to do here is keep the momentum going after the house passed its 2018 budget earlier today. so let's hear what we has to say. >> let me first start off by
saying how thrilled we are to be here at dixon. it's a fantastic family-owned and operated business. these kind of jobs that you have here at dixon are great family-supporting jobs these are the kinds of great jobs we want to see more of that we think we can get with faster economic growth which will lead from tax reform. it's great to hear we finished a roundtable with the owners and executives here at dixon on how tax reform actually helped them grow their business, add more workers i was just talking to the head of national association of manufacturers. it's the biggest manufacturer trade association in america over 14,000 members which are companies that are manufacturers. two-thirds of their workers that they surveyed said that they, with tax reform, will buy more plant equipment and will hire more people. over half of those surveyed, the manufacturers said they'll actually increase base pay if p tax reform happens these are the kinds of things we know we will get with tax reform and tax relief for middle class families that's one of the reasons why
we're so focused on getting this done with that, i'd be happy to take any of your questions. a little louder. it's kind of -- >> i have two questions. one on taxes but one -- sorry. >> hey you're not used to the microphone, are you? >> no. back in d.c., we don't have this this is nice two questions. one is on taxes, but first, on kind of some news of the day i know you've been asked about these bump stock issue after las vegas, and the nra today came out and said they support the bureau of alcohol, tobacco and firearms reviewing whether these comply with federal law. i want to clarify when you say you're open to reviewing this, whether you think that should be done through the bureau, reviewing whether it complies or whether this is a vote that congress -- >> regulatory, statutory >> can yeah. >> it's a good question. i don't know what a bump stock was until this week. i think a lot of us are coming up to speed. i'm not an avid sportsman. a lot of us are coming up to speed just what this is, but having said that, fully
automatic weapons have been outlawed for many, many years. this seems to be a way of going around that. so, obviously, we need to look at how we can tighten up the compliance with this law so that they are -- so that fully automatic weapons are banned we need to go back and figure out how this happened in the first place so i think there's a big regulatory question and then we just had to do more research to find out what's the best way to make sure that the spirit of law is upheld? >> sorry, can i ask the tax question >> oh, yeah, i'm sorry. >> and the tax question is, you've been doing a lot of these factory tours with businesses and talking to employer and their employees. but is there more you can be doing to message on the individual side? you did hear from somebody today, how does this affect me how do you drive that message home to individuals? >> you're right about that there is more and more i obviously plan on doing. we all plan on doing it's a very, very good question. you know who we think about when we think about tax reform and tax relief we think about the moms and dads who go to bed worrying about the
next day whether or not they can make ends meet we're thinking about the people in this country living paycheck to paycheck. so the purpose of tax relief is give middle income taxpayers a tax cut. give them a tax break. and the things that we're going to be doing that do that, lowering people's tax rates, raising the standard debux, making it so people can fill out their taxes on a postcard, increasing the child tax credit, removing the marriage penalty. all of those things give middle income taxpayers a tax cut so they can make ends meet because there's a lot of economic anxiety among middle class taxpayers and low-income people in america and we think we can help relieve that anxiety by cutting people's taxes that is something that we definitely want to get more into, but the focus of these factory tours is to talk about how we can help these companies be more competitive, and how we can hoelp these companys can expand, grow, and raise wages and hire more people
it all leads to the same end which is help people become more prosperous help people get better jobs with bigger paychecks help the american economy be stronger and healthier these things are all related a we and we're going to talk about all of it. yeah right here >> it's eric lawson, "bloomberg." two-part tax question. very maryland specific study out yesterday shows that if you eliminate the state and local tax deduction, maryland has the highest percentage of taxpayers who would see a tax increase can you update us, where is your position on this, how firm is the idea of limiting this entirely on the business side, you came in, talked about full and immediate expensing here a tax foundation has a study out that says that provides a, quote, sugar high to the economy, it's not as lasting as some have thought. can you respond to that idea >> i haven't seen the tax foundation study that would surprise me their model is very
pro-expensing. their model is a capit capital-intensive model. i'd be shocked if the tax -- >> do you feel it does provide sustained -- >> i spent a lot of my time modeling this stuff. first of all on your state and local question, i'm not going to get ahead of the ways m s & mea km committee. going to be writing this bill. here's the point of what we're trying to do here. by removing loopholes s or deductions, raising the standard deduction for everybody and lowering everyone's tax rates, we want to give every middle income family in america a tax cut. that's the purpose of that so it's important to look at this in the whole scheme of things and its totality, lower tax rates, higher standard deductions, higher child tax credits if you have kids on expensing, the economic evidence is valely clear i would argue that if you encourage a business to buy more
equipment, they'll buy more equipment. and? a business buys more equipment, then they'll hire more people to run that equipment and giving them the incentive to fully expense their purchase of equipment means more equipment is bought, higher productivity, higher wages, faster economic growth and the model at the tax foundation clearly shows that, you may be saying tpc, be my guess. probably saying tpc, which, yeah, okay, so i think tpc has shown their ideological and partisan colors with the fact that they put out an estimate on a mythical tax plan that hasn't been written that doesn't exist, that the they just made up a bunch of assumptions yeah who are you with >> rob lang, wbal radio in baltimore. two-part question. first, to follow up on the first question on guns, do you believe that banning these blocks that are under -- now under review, could that -- would that have prevented or at least made what
happened in las vegas -- >> oh, i'm not going to speculate on a strange hypothetical like that you didn't etven know what they were called. bump stocks. i didn't know what these thing were called come monday. >> neither did i. >> the point is, we have to get more educated as to what these are, how they became available in the first place was it a regulatory misstep by atf, some number of years ago? and we all know and believe that fully auto weapons are illegal and so is this a big gap that needs to be closed, and if so, how to close it? we're all just beginning to go through that analysis. >> very quick -- oh. >> i just want to give her -- yeah, who you with >> i'm with nbc news wanted to ask you, do you believe dtim murphy resign as soon as today or serve out his term >> i've spoken with tim quite a bit last couple of days. i think it's appropriate that he
moves on to the next kmachapterf his life i think he agrees with that. i won't go skinto the timing of announcements but i think it's appropriate that he -- it's in his interest to move on to the next chapter of his life. >> if i can ask you on a different subject, there are reports the president is supposed to decertify the iran deal is sthat a position you agree with, mattis and dunford said it's in the national interest to stay the iran deal. i wanted to see where you are on that. >> i'd like if for the president to make the announcement of what his policy's going to g. i've studied this issue greatly. what we need is a comprehensive iran strategy and we have not had one. we did not have one from the last administration. the only comprehensive -- the extent the last administration had a comprehensive iran strategy was to get a bad deal in this iran deal. so i believe the administration is reviewing much like they did in afghanistan what does a comprehensive strategy to deal with the threat facing us and
the region from iran, and that is a strategy they're developing and i don't want to get ahead of the president who's going to announce his strategy shortly. yeah >> hi. ashley kelly with cnn. in light of the president's statement this morning, do you think that congressional -- >> which statement are you talking about? there's a bunch of them. >> he questioned whether the senate intelligence committee should investigate what he called fake news outlets joust curio just curious, do you think congress -- >> i'm not familiar with the statement. sorry, i was busy in the house today passing our budget. >> do you think congress should investigate news outlets -- >> all i'll say is this thing keeps dropping down. all i'll say is we have a thorough investigation in the house. a thorough investigation in the senate and it is to investigate just what happened with respect to russia and what did they do, they, the russians, to meddle in our elections and pass misinformation so you all know, i think it's been reported that facebook had
russian advertising. so the question is, to what extent did the russians try to meddle in our political system like they're doing to can oaoth countries? we have to uncover all that and equip ourselves with the tools to prevent it from happening again and give our allies the ability to prevent the russians from meddling in their elections and does involve whatever it is the russians do. can't speak to what the president said this morning because, frankly, i'm not sure what the statement was thank you, everybody appreciate it. >> and that is house speaker paul ryan taking his pitch for tax reform to the public let's bring in ylan mui for a little reaction here ylan, the other notable news event of the day was some gop support for banning bump stocks on weapons that could be used to turn semiautomatic rifles into automatic ones. >> reporter: it was a wide-ranging news conference, kelly, with the speaker saying he believes there should be tighter compliance with the regulations around those bump stocks, but on tax reform, what stuck out to me was that he said that every middle income family
should see a tax cut under this plan that is something that has tripped up white house officials who said they cannot guarantee that all middle class households will see a tax cut you heard with spiker ryan, doubling down on, this tax plan, helping middle americans >> all right ylan, thank you very much. ylan mui welcome to "the closing bell", everybody, as we go and ring the close here, the dow going out with a gain of 114 points today. that puts it at 22,776 half percent increase there. the s&p 500 also half a percent, 2,552. everybody's in the green this is the theme we've been seeing for several days in a row. the s&p up eight days in a row i believe. since consecutive all-time highs set for the first time since the late 1990s the russell 2000's up.25 to 1,512. record closes for the dow, s&p and nasdaq once again today. we're waiting on earnings from costco we'll bring you those numbers as soon as they are out
and joining me here to talk about these markets, cnbc senior markets commentator michael santoli. stephanie link managing director and equity portfolio manager, tiaa investments. karen finerman, president of metropolitan -- thanks for joining us down here. >> happy to join you guys. >> the plum theme going on. >> we did. >> a record day for the markets, michael. we've seen these creeping higher today was a pretty big leap. >> yeah, went from walking higher every day to jogging today. it was a half a percent move about twice the typical pace in this little seven-day win streak it's hard to really identify something specific that should put a stop to this slow climb except for the fact it starts to seem inevitable that it goes up every day. once that sentiment is truly broad out there, we stlech stretch to further highs, maybe tha that's the time to worry maybe change of view about what the fed has to get going of the jobs number.
netflix the best performing stock. student loan, navia, was the worse. goldman was the worse. stephanie, what do you make of that >> overall, it was like the winners won today. it was faang they had a great showing best day since mid-july. they're up 3.5% since last week's lows. so the old winners were winning. semis continued to do well health care did well financials did well. so we've been talking about this all year long. it's been this rotation every week, every day, and as long as there's enough participants, that's going to keep the market higher until we get earnings. once we get earnings, then i think yeou're going to see a separation between sectors and individual stocks as well. >> karen, let's drill down on this netflix story for a second. shares up 5% on the news they're going to hike their fees for users by $1. nobody is grandfathered in this will be the case for everybody. the plan, traditional hd streaming plan from $9.99 to $10.99 a month basic plan still $7.99
market reaction, shares close d higher by 5.5%. >> it makes sense to me. think of threat thnetflix, cons with my use. my own laziness. if my bill goes up by $1, $2, depending on the plan, i'm too lazy to do anything about that that's the bet they're going to make and people love the product. this is big bottom line margin improvement as it hits the bottom line. >> the street seems to be taking this as there's no problem in terms of their content, people love it, they're will ing to pay up for it. there's never been more competition, michael. >> there's never been more competition from others trying to do what netflix does. i think you could argue. i think netflix has reached a point of seeming like the default option for anything besides the bundle even if you have the bundle it's become at least indispensable by some people's like look, 10% bump really in monthly fees. >> yeah. >> 5.5% bump in the stock. that makes sense to any.
mostly because pricing power has been integral to the bull story for a very long time i don't think there's any reason to think this is going to cause massive attrition. >> speaks to their strong content, think they can to do without attrition and not raising prices afterno s on thec plan maybe than kcan stem the issue with password sharing. that gives more confidence oh, by the way, i think we're starting to feel better about the 60 million sub number for 2018 if you start getting confidence in pricing power, content, then earnings, that's pretty powerful. >> i thought of, karen, it was interesting wells fargo came out, they thought the price increase was good for disney because two years from now disney will cost a plan they think will cost $9.99 a month. so it will be cheaper. taking into speculation a few too many steps ahead >> disney has near term today issues that have been obviously weighing on this stock i guess if we get back to everybody pricing they've product higher, we get back into
maybe cord cutting at some point. >> netflix becomes the cord. >> or stream cutting whatever you want to call it we're a ways from there. >> what about the idea of disney taking their content off, that's a bigger problem it for netflix down the road. you think that's going to be th case >> they defied it every turn when they got into the content business, i thought this is a disaster turns out, they're fantastic together. >> lily hammer, original series on netflix i remember thinking it's okay but i don't think this is going anywhere there are other -- anyway. student loan service navient was the worst performer in the s&p today, down 14% after pennsylvania's attorney general sued the student loan company for allegedly approving loans for students with a high probability of not being able to repay them sounds like subprime the attorney general telling cnbc the scheme cost student loan holders $4 billion. navient says the allegations, michael, are completely unfolded. >> obviously it's pretty tough to kind of make a comment on the merits of the allegations except to say clearly this is a lender
at the bottom tier feeding off of students who don't necessarily have many other options. at institutions where there was a pretty decent chance they weren't going to graduate with a degree and have a good shot of paying it back all doesn't look great for navient. the market's verdict is it's not going to be that easy to defend across the board. >> i also wonder where the student loan problem is heading. this reminds me of it a little bit. we know there's $1 trillion plus in student debt outstanding, everybody from the home builders like lannar saying we're going to pay down your debt if you buy one of our entry-level homes even when the president was making remarks about wiping out puerto rico's debt the other night, some people saying what if student loan debt withere to next >> this is not an easy solution in any way, shape or form. with this company in particular, though, not only they have this issue, then they decided to make an acquisition that is dilutive to earnings, dilutive to free
cash flow. they're going to stop buying back their stock so they kind of look a little guilty in a way, but, you know, we'll have to see how it all works out. i don't think the bigger picture goes away any time soon. >> karen >> i looked at some of the for-profit education stocks today. i know a lot of loans are backed by the government but i was surprised. they had really no reaction at all. this is a very big problem >> exactly yet they seem to be taking this as an isolated case. or somehow not indicative that there's going to be a problem for everybody else as well. >> they seem to be -- i'm very surprised. >> yeah. time will tell shares of u.p.s. closing lower today. fedex a little higher, actually, after reports amazon is testing its own delivery service the new service would reportedly be aimed at making more of the company's items available for free two-day shipping. says amazon is calling the project seller flex and has plans to roll it out beginning next year. this actually is a bit of a turnaround, mike, for u.p.s. and fedex. u.p.s. in particular was down a couple percent earlier on. >> yeah, i think people started to think about it a little more
detail in terms of what actual piece of the business amazon is going to try to do directly or at least experiment with amazon has no interest in recreating the entire infrastructure of delivery that many thousands, trucks and all the rest of it i think the big question to me is how much stress amazon puts on the entire delivery transportation infrastructure, because it demands for immediate delivery is it going to be another tough holiday season, make pricing tougher for those guys to get? that to me is more interesting than this idea that somehow amazon is going to be displacing these huge companies. >> karen, i was surprised that u.p.s., fedex, apparently a single digit percentage of their business is amazon. >> i was very surprised. i would have thought it was the bulk of their business i've been thinking, why should they build it when they can buy it and maybe would want to buy fedex which would be an enormous deal i was surprised to see that, too, the u.s. post office is, in fact, their biggest customer. >> big handler for them, that's true stephanie, maybe that means the taxpayer somehow benefits.
aisle n i'm not so sure. >> i'm a shareholder of fedex. the reaction in the stock was absolutely telling down 2% at the open. that's because amazon is going after the third party in this particular instance. that aren't already using amazon so they're just trying to clear out their inventory. i guess that makes sense from amazon's point of view especially in dense markets, especially during peak to offload that stress like you were talking about in terms of pricing power, fedex is raising prices mid single dints. so is u.p.s. mid single dints on a consistent basis. i do not think giving their capacity, given their wherewithal, their dominance, that that's going to change. they do have pricing power i wouldn't be surprised one day, one day if fedex and u.p.s. has a much smaller sppercentage of their business with amazon it's not profitable business for them it's puts and takes. these extreme reactions to when amazon makes an announcement or there's speculation has very often been a buying opportunity
for a lot of different stobcks and you have to dig through it. >> fedex reminded people today that 85% of the business is business-to-business. >> right. >> they're not really mostly delivering to your home. >> that's right. >> so if -- >> u.p.s. a little more. >> as we head into the holiday season, any ramifications then >> i don't know. i mean, did they ramp up capacity enough? i mean, have bottleneck? i don't really know. that's obviously what amazon cares about. >> always been so hard for these two companies. i always kind of say you don't really want to own these stocks in the first quarter of the full year because you get the fourth-quarter result. the rest of the year it's home free you know honestly you have to give -- there are puts and takes throughout the year. i think they're very well positioned. >> just want to circle back for a moment to the broader markets which we had a trifecta of record closes. we did see a jump up earl quaie when they passed the budget resolution out of congress is that setting us up for tax reform almost say it bought you 60 points on the dow and that's it. how important is this passage do you think overall is. >> i think it got them to the starting line. they've had trouble getting to
the starting line before on some other issues so it's good. but, of course, they had to do that to even get to here i think, though, that they will get something done no matter how watered down it is, no matter what they have to give up, whether it's corporate rates, whether it's the state and local tax deductibility. i think they need a win and no matter what it is, even if it's not permanent, they will get something done. >> actually might have some news on this.joins us from washington with more on how the process might be moving along. >> reporter: the senate budget committee passed its version of a fiscal 2018 budget budget committee chairman mike enzi saying this budget is a step toward a brighter future and now you can expect to see this budget go to the floor of the senate before the end of october. also, in some unrelated news from capitol hill, we are seeing that congressman tim murphy has resigned his post effective this
afternoon. house speaker paul ryan reiterated his comments from that press conference here in a statement saying that tim murphy's decision to move on to the next chapter of his life was his own and that speaker ryan supports that call of course, congressman murphy stepped down after reports came out that he had asked his mistress to have an abortion even though he is someone who has been strongly pro-life so two important and interesting developments there on capitol hill, kelly. >> yeah. i'm not going near that. ylan, thank you. guys, except to say this vacancy now will be open by a pennsylvania republican. is there any implication, mik b michael in terms of political process? >> i think the district is still considered to be a likely republican hold. i don't know it's going to necessarily change the equation very much. obviously another position in play where you're going to have two new contestants. >> stephanie, broader news, of course, senate budget committee approving the budget resolution sets in notion what cakaren is talking about. >> i think it's starting to get
priced in. i listened -- >> after this record run. >> i do think it is -- some people say it's not. how could it not be at this point? i know we're all excited about it because it will benefit corporate earnings and that sort of thing and buybacks and repatriation i think either way, as long as we get some sort of understanding of what's going to happen, we don't get a good bill, if we get a good bill, either way we can start fresh and figure out businesses can spend, businesses can do m&a having that understanding and that's i think is so important >> and finally, tomorrow morning, michael, we're going to can get the jobs report which can off set the tone for all of this how strong is the economy, what kind of growth can we get b what can we expect out of washington, what's going to be chair of the fed? gold mn said they think it might only be a 50,000 number because of the hurricane impact and other things is that -- should we take that at face value or disregard it, wait for the next -- >> i think it's going to be unsatisfying for that reason you're going to be able to have the full range of responses from this means nothing to, wow,thy might have implications for the economy and the fed. i don't really think -- by the way, the jobs number has been
not been a market mover in a very long time. >> that's true. >> been probably over a year. >> we have that, karen, we have who's going to fill the fed chair. which is more important for you from here? >> the fed chair that's a big decision, the jobs thing, we get however many a year of those. the fed chair thing is really important. there are some good candidates, though. >> stephanie, what do you think -- i mean, we've got sort of the warsh reformer, more hawkish character, yellen who sounds like she's not in the running at this point. who -- >> it's very important, obviously, right, but, i mean, i think at the end of the day i'm looking at the broader economy if the economy is improving, if interest rates kind of stay, and even if they gradually go higher, but they go higher at a measured pace, and the economy is strong enough to handle that, that's okay. i think if the global economies are doing well, we're going to be able to handle some changes it there's change coming, no doubt about it i think it's going to be more hawkish than not i think it's going to be at a measured pace. i do believe that.
>> all right stay right there, everybody. we have earnings to get to costco's results are set to be out any moment now we're going to break down the numbers and discuss whether they can help give this underperforming stock a much needed boost amid increasing competition from amazon. plus we'll hear from one analyst who's making a very bullish call on the old-fashioned broadcasters she thinks they could outperform the broader market. we want to hear from you, contact the show via twitter, facebook, or send us an e-mail, firstname.lastname@example.org you're watching cnbc, first in business worldwide
welcome back those costco earnings are out now. seema mody has the numbers. >> reporter: costco reporting earnings of $2.08, higher than what the street was expects, . $2.02. revenue beating expectations at $32.3 billion. wall street was anticipating $41.5 billion, that the estimate terms of sales, up 6.1%. we're looking at the stock down right now nearly 2% here in extended trade would point out the stock is still up for 2017. on the conference call, we'll
look for details as to how the hurricanes impacted costco, if at all, in this current quarter, plus, of course, how it plans to fend off competition from amazon kelly? >> yeah, seema, thank you. shares down about 2.25%. stephanie and karen are back with us along with liz dunn pr proforma here to react to these earnings let's begin with you, what numbers jump at to you >> comp number in line, 6.1% for the quarter. 8.9% from september. probably helped from the hurricane. we'll have to see. understand that a little bit the company posted a 16%, 17% earnings growth rate beat on revenue. that's a really great number, right? speaks to the business model that they have and the traffic that they're getting into the stores because of the membership that they have so, i would like to have them break out the e-commerce business for the first time last month, they actually broke out e-commerce and how much it grew double digits, which was impressive think we have to get comfortable about their e-commerce strategy, where that's going relative to the bigger picture. >> liz, you're a lit more
cautious on costco here. what do you think of this report >> i haven't gotten a chance to dig into the report yet. to stephanie's point, the e-commerce growth will be important. membership growth very important. the september numbers look very strong but the reason the stock has underperformed year to date is because of the competition that's on the com. amazon acquiring hold foods. that is only in the very early stage of having an impact. i'm not quite sure what they can say to lessen investors' fear about that phenomenon, but we'll certainly be looking for it. >> karen, what about you >> i mean, they must feel bad. they put out pretty good numbers, right >> right. >> this is the thanks they get i mean, they thought they were pretty good. i don't own it, always thought it to too expensive, short-sighted for me because the stock has done well. we'll see how much the hurricane -- i guess it's still
other than amazon, retailers don't get the multiples they used to. maybe that's the way -- despite great ininearnings. >> i say they should rename is costco prime, that's what it is, they invented prime. >> they inspired amazon prime. >> it's interesting to hear liz say it, there is this overhang that amazon/whole foods can do thing. while there's overlap in the customer profile, i was under the impression not a lot of overlap in product categories and size and all the other type -- small business customer for costco. >> that's a good point also what about the price? stephanie, it feels to me like certainly when you -- when i go on amazon, i'm no gt getting a great price. i'm getting convenience. at costco, you're undeniably getting a great price. do you think that can differentiate them in this environment, still >> absolutely. their product selection, pricing is absolutely the lowest out there. they have the membership fees. they're getting the retention of the memberships. so i think that's really very important. i don't think that goes away overnight. sure, there's competition. guess what, this stock just went from 150 to 165.
so it's going to pull back i think you're going to get an opportunity. i do think there are still some winners in this amazon world >> you know the one thing, karen, i think is interesting, in terms of opportunity, maybe missed opportunity for them, is the urban millennial, i'd say. you know, i know that trend is changing and they're starting to kind of go to the suburbs and buy houses and that's probably good for costco. while people are in the city centers and want to be, costco is a hard proposition for them, right? >> it is e-commerce, you know, if they can really ramp that up, that would be a good thing. one other point i want to make about the fee increase for the partnership, for members, that was really accepted very nicely, maybe speaks to the netflix, people like, we love it, that's fine whatever it is, it's still a great differently, though you think in this case amazon is a worthy competitive with whole foods. to me, it feels like the price costco efforts, they're not just a grocery store, you can almost buy anything from them. >> right well, i think past part of my fear, there's no room to --
there's no room to give on the margin so with gross margins in the low double digits, and operating marnle margins in the low single digits, there's nowhere to go and have the e-commerce penetration in the mid-single digit range. if you think about what it's going to take to grow that, they're going to have to invest. i don't know that there's any margin to give you got amazon now saying they want to go after grocery aggressively you've got walmart having paired up with jet and they're saying they want to be more aggressive in grocery so it's just -- i mean, these are fantastic numbers and we certainly can't take that away from them. i think with the stock trading where it is, the expectations heading into this report, it makes it difficult for the -- it's kind of fighting against itself and fighting against the negative perceptions out there >> all right guys, thank you, all liz dunn, karenfinerman, stephanie link very much appreciate it. more on costco earnings on "fast money" tonight along with roger mcnamee, says facebook is in a lot more trouble than you
think starting at the next of top hour. coming up here kansas city fed president is about to make comments at a conference in austin, texas. bring you those remarks as soon as it happens. and amazon's disruption seems to know no bounds. now they're turning grad school recruiting on its ear. that story ine iou"ft ke."s xtn r as
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i mean, you did find money to buy those boots. (alert beep) are you serious? is that why you don't like them? those boots could make a unicorn cry. yeah! tears of joy. (groan) settle up with your friends on october 17th with the bank of america mobile banking app. settle up with your friends on october 17th hey ron! they're finally taking down that schwab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management. welcome back it is time now for today's "fast take." further evidence that tech is the new wall street.
amazon is now the top recruiter of mba students at carney melon, duke and berkeley. the can"journal" says today hired more chicago booth interns, and it hired 1,000 mbas in the past year alone. >> i'm not sure they're disrupting the recruiting process, but being a little more disruptive -- >> disrupting bane's recruiting process. >> essentially doing it like they do, which is all-out. i think i heard from nyu, recently, saying that he was surprised to see amazon was their biggest recruiter. it's interesting that mba candidates, i mean, to me that's always a good sentiment tell, all they wanted to do was wall . >> tech is the new wall street. >> amazon in particular. >> once again. next, facebook, speaking of tech, isn't the only tech zwrgi with a fake news problem today a fake story that quickly got over a million views same for nfl anthem protest result now youtube is tweaking its algo
to keep that from happening again. facebook hiring a thousand people to filter its ads man, good old-fashioned "wall street journals" never looked better. >> is obviously a game of spy versus spy, the old cartoon. i don't think you're ever going to be truly be able to get in front of it. somebody out there has an interest in trying to game the algorithm, experimenting and testing. the whole transparency of it, ability to try as an independent user, advertiser, is part of the appe appeal. >> dleest wiat least with a newo have a defined piece -- if they're saying we want to define all the content in the world -- >> we're going to buy an ad against a search term that might not exist yet. it's hard to get in front of that. finally today, nfl star cam newton lost his yogurt endorsement deal before i'd heard about the controversy. apparently last night, jovideo s pretty tough, he laughed off a female reporter for speaking about routes dannon dropped him as their spokesman. is that in part because oikos'
target dem know is females >> you have to believe that's a huge part. in the commercials he does, he's in a supermarket talking to female shoppers. just i think the fact it was pretty dismissive. his comment was just kind of -- couldn't be read another way. >> is there any way they could have turned it on its head to make it more charitable to -- almost have some fun with it, turn those grocery ads into something where -- >> maybe that's down the road in the skikind of backlash to the backlash that might result i don't think it's going to be -- i guess we heard also gatorade put out a statement chide it but not cutting him loose. >> yes, although i wonder if they were more of a female-oriented product -- >> right there's the difference. >> gatorade said cam's -- >> dannon is not otherwise an athlete-centric brand, right >> that's also true. gatorade says it fully supports women who compete in, report on, coach for or play any role in sport on or off the field. is it maybe a little over -- i
didn't heard about this by the time that it happened. >> brands are so knee jerk defensive. >> especially with social media these days. >> exactly. >> anyhow. we can keep -- okay. we're going to talk more about the fed at this point. we have a news alert coming up here in just a couple of seconds with our very own steve liesman. steve? >> reporter: hey, kelly. thanks very much i'm here in austin, texas, where kansas city fed president esther george is about to speak and says further rate -- she says the economy is growing at an above trend rate while the same time unemployment is running below its trend rate said, we should be gradual in raising rates but they're postponing the rate hikes do pose risks earlier today i got to talk to philadelphia fed president patrick maharker about low inflation, how it will affect rates. here's what he said. >> there are issues here particularly with respect to low
inflation. because it doesn't give us the leg room we need in case there's a negative shock in the economy. i still have three rate hikes in for next year. again, we'll have to see how the dynamics play out. >> reporter: he also thinks the fed ought to hike in december. sees a 2% inflags rate i'll get to post the questions tomorrow to robert kaplan, dallas fed president, hosting this conference here about workforce development which sabt putting people back to work. kelly? >> all right steve, anything jump out to you, michael? >> above trend growth is an interesting way to characterize where we've been if that's, in fact, what esther george said. is sththat what we're talking au when we say 2.8% -- >> what's trend, 1.5%? >> that's the one nitpick. of course she want to get on with things in terms of rate hikes. >> steve, thank you very much. steve liesman for us. now a blockbuster "new york times" story detailing decades of sexual harassment by movie mogul harvey weinstein sent
shockwaves through hollywood julia boorstin joins us from l.a. with the latest julia? >> reporter: hey, kelly, "the new york times" alleges harvey weinstein is guilty of decades of sexual harassment, in an expose published hours ago the 3,200 word article reports weinstein, ceo of independent film company, the weinstein company, and co-founder of miramax, reached settlements with women one of those settlements with actress rose mcyougowan in 1997. the article details actress ashley judd's accounting of sexual harassment by weinstein in a hotel room 20 years ago this paints a picture of a pattern of misconduct. the article says eight women shared stories of wieinstein appearing nearly or fully naked or asking for a massage. the attorney said, ""the new york times" published a story with false and defamatory statements about harvey weinstein, rely on mostly
hearshayhea hearsay accounts and reports stolen from an employee file we sent the "times" the facts and evidence but ignored it and rushed to publish. we're preparing the lawsuit now. all proceeds will be donated to women's organizations. weinste weinstein, himself, issued a statement to the "times" that undercuts that of his lawyers. his includes this. saying "i appreciate the way i've behaved with colleagues in the past has caused a lot of pain, and i sincerely apologize for it." weinstein saying he's taking a leave of absence from his company, to deal with the issue head-on. guy, ba guys, back over to you. >> all right, julia, thank you very much. julia boorstin. time for a cnbc update let's to get over to sue herera. >> hello, kelly, hello, everybody. the "washington post" reporting president trump plans to announce next week that he will decertify the international nuclear deal with iran saying it's not in the national interests of the united states the president is expected to
deliver a speech next week laying out a larger strategy to deal with iran the nra is calling for additional regulations on bump stocks which are designed to allow semiautomatic rifles to function like fully automatic ones about a dozen bump stocks were found in the hotel room of the las vegas shooter. and that gunman who opened fire on las vegas concertgoers researched chicago's lollapalooza in the months before the mass shooting law enforcement officials telling nbc news that stephen paddock researched both the chicago festival and hotels around boston's fenway park. the university of nevada las vegas will pay tribute to the victims of the mass shooting the football team will wear specially designed helmets featuring a red ribbon an words, las vegas, on a black background that is the news update this hour kelly, i'll send is back downtown to you. >> all right, sue, thank you very much. coming up, yum china's
earnings are out we're going to find out if the fast food chain was able to see a revenue rebound from last quarter. plus, how fannie mae and freddie mac are helping younger people crowd fund a down payment to buy a home. that's still to come on "the closing bell." alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.
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welcome back another strong session and another record setting one on wall street today. the dow adding 113 points to close up at 22,775 as it continues its march toward 23,000 the s&p up 14 points today its eighth straight higher day close in a row first time we've seen a streak like that since the late '90s. nasdaq up. the russell up .25% today. now we have an earnings rorlor the on yum china. >> reporter: this is a mixed third quarter for yum china, of course parent company of taco bell, pizza hut and kfc. reporting adjusted eps of 52 cents. the street was liking for 56 cents adjusted on revenues of $1.94 billion. also comp store sales had a nice beat at 6% the street was looking for about 3.3% kfc comps in particular were up 7% this quarter. they also added a dividend of 10
cents per share. most importantly, current ceo, pan, will be moving it to vice chair and joey watt will be the new ceo effective march 1st. he's the current c.o.o year to date it's up more than 50%, kelly back over to you. >> wow, that's a big move choppiness around the first reports. >> initially there was, absolutely i think year to date, do midwestmidwes domestic china stuff has been cat nip for investors. now above 40. >> that's yum china with its earnings report. broadcast stocks got a bump when president trump was elected in anticipation of a wave of deal making in the media sector. the stocks have been struggling. deals were far and few between so far up next, one wall street analyst who says now is the time to bet on these names we want htoear from you send us your thoughts to
facebook, twitter, or e-mail your best comments today are coming up. so you miss the big city? i don't miss much... definitely not the traffic. excuse me, doctor... the genomic data came in. thank you. you can do that kind of analysis? yeah, watson. i can quickly analyze millions of clinical and scientific reports to help you tailor treatment options for the patient's genomic profile. you can do that? even way out here? yes. even way out here.
cable and broadcast stocks taking a dip lower today as you can see there, as competition ramps up between the traditional media players and the streaming disrupters media execs sounding off on this issue at the "vanity fair" summit earlier this week. >> we are also in the business of make sure we built optionalty for consumers by creating an ott business with hbo now in addition to our cable, satellite and telco businesses we're growing in all dimensions
of our company and continuing to create great content we want our consumers to have options and want them to vopgshe options that give them flexibility and we built the streaming services we did. >> we think there's actually an opportunity to get more economics but the way to get it would be by not getting higher prices from the cable distributors and satellite distributors, but also to be able to do different kinds of bundling and also to be able to take our content direct to consumer which is something we're aggressively pushing since we own all of our content, we're able to take it direct to consumer. >> a lot of change, a lot of uncertainty and a lot of tension that exists between the traditional players in the business, or among the traditional players, as consumers have more choice, as new distributors come to the market, as new producers come into the market. we were confident going into this that the outcome would be fine for us, and i'm pleased to say so far, so good. >> well, our next guest is also pretty confident she sees an upside for broadcast
stocks joining us is marcie from wells fargo securities marcie, thanks for joining us. just start out by saying, which companies in particular you think are poised to benefit here >> so we have favored the pure play broadcasters. it's great television. nextstar and sinclair. there are a host of reasons why we think 2018 is going to be a really good year for the industry. >> such as >> you are going to have the olympics and the elections which is going to spur overall advertising. there should be deregulation with relaxation of the local ownership rules which should spur m&a sinclair tribune deal should close which should remove a huge overhang you're going to have continued growth in retrans and net retrans. the streaming bundles are going to gain momentum the broadcast stations, almost all of them, for a higher price than what they get from traditional mvpds and hoping for economic reform which could actually help accelerate core advertising growth >> all right michael, she's got me convinced. >> yeah. i mean, i guess, marcie, your point about the fact that the broadcast station owners should
benefit from the skinny bundle movement, and of course, ott, is interesting. how do the economics break down in terms of the actual stations as opposed to the networks getting the benefit of those skinny bundles >> so the networks make the deals with the over the top providers. and they pay the broadcast stations their cut and from what we understand, the actual retrans feed the broadcast stations is higher than what they get from the linear distributors. it's accounted for differently but the economics are actually significantly greater. >> so marcie, when we talk about streaming, we think obviously about netflix. we've been talking about that all day. you're pointing to hulu live and amazon channels as part of your argument here. what's that gooing to look like >> hulu tv, youtube streaming, directv now. i think eventually it will be sling tv those are the streaming bundles that sort of look like cable what i think is valely interesting is there are fewer channels in these bundles so you will be watching those networks
on those channels more and the stations are in there. so sthair goi so they're going to benefit on the retrans side and advertising side our point of view has been that broadcast is actually stronger than cable networks. if you look at any retrans fight in the u.s., it's the stations, the broadcast stations, that have the most publicity. it's not the cable networks. >> so i might be asking you about names you don't cover. please, obviously, just say so, but we quoted earlier executives from hbo, discovery and disney where would you stand on those types of company relative to nextstar, sinclair and gray? >> two completely different investment places. you have long-term investors in the bigger cap names, shorter-term investors in the small cap names. we came out very positive on disney i stand by that recommendation i think that's our top pick in the large cap media space. time warner is being purchased by at&trn i don't know how that fit into
an investment thesis at this point. discove discovery, it's not included in the streaming bundles. nextstar, sinclair and gray, we have more upside on a shorter-term basis if you look at our price targets. >> what is the m&a wave going to look like for the broadcast station owners, is it going to be just kind of horizontal, them getting rolled up together or will the cbses and foxes that own stations as well will be buyers >> i don't believe cbs and fox will be aggressively buying any station. fox has been known for spinning off its tv stations. i don't expect hem to them to ba buyer. cbs may be interested in afc markets. that may be one or two in terms of the station groups, i don't expect huge transactions with relaxation of the local ownership rules, you could have swaps and what that does to margins is increases them by 10 to 15 basis points it's tougher to value but from an economic basis, it's a good transacti
transaction. >> let me circle back to discovery. you mentioned they're outside a lot of bundles but have made a move for script to beep up their own program. do they need to offer a standalone product, become integrated are the risks bigger for them? >> i don't know that they need to do a direct to consumer product. i really think disney and cbs have uniquely positioned themselves to be successful. what i think for discovery, we're going to see how this nonsports entertainment pack goes whenever it is launched that's what they're sort of counting on. >> all right we could get into sports that's a whole other topic for now we'll leave it there fascinating. i'm not just saying that because i work in this business. it's a great point we thank you for joining us. >> thank you very much. >> marcie from wells fargo perspective homeowners, pay close attention. there is a new way to make a down payment on your home without using your own money and it's backed by fannie and freddie. we'll have the details on itle coming up.
researchers of technologies that one day, you will. some call them the best of the best. some call them veterans. we call them our team. pthey don't invest inn stalternativesds. or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more.
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and enjoyed by the community in the future. together, we're building a better california. a majority of millennials say they want to own a home. but many can't afford a down payment. one mortgage lender has come up with a new way of doing that by coming up with cash from other people diana oleic has details. >> reporter: until now, down payment assistance was limited to close family members, employers, community nonprofits or your church and all had to have significant documentation. >> this is different this allows you to tell your story. it allows for folks to be able to buy into the story of what it is you have, your loan story, your home story. and one of the things our tag line is, fund your way home.
>> reporter: cmg financial, a mortgage lender, is launching home fund me, the first online platform that gives homebuyers a way to both market their needs and receive multiple small tax-free cash gifts from anyone to finance the down payment of a home this has the blessing of fannie mae and freddie mac, which finance the vast majority of mortgages today. >> we're trying to test a variety of solutions the preferences of today's homebuyers have changed significantly. there's no silver bullet to solving a problem that's as hard as how do you find a down payment. >> reporter: the idea really is to link this to, you know, your wedding and your baby registries, in some cases add to the savings you already have, which could help you avoid higher interest rates and mortgage insurance interesting idea, kelly, no? >> yeah, the biggest surprise to me is fannie and freddie are already backing it, diana.
>> reporter: test pilot. test pilot program they say they're trying to help. they want to be able to help they realize that millenials have a problem getting to that down payment, especially as home prices continue to rise and they need bigger down payments. they're test piloting the program, they want to see how it box, how the loans perform they want to see if the millenials, or anyone, it's not just millenials, if anyone can get their friends to finance their down payment it's a we coudding gift, sure but beyond that, who is going to give you the money i don't know >> michael, i think it's kind of brilliant. >> it is fairly brilliant. it should come with rights for visitation whatever you want, you can negotiate the terms of the down payment >> you're so nefarious >> reporter: i have one issue with it, though. what about the issue of ask i n skin in the game
during the foreclosure crisis, a lot of people walked away because they didn't have skin in the game they had no down payment loans, they were in maybe a negative equity position. what's the argument on skin in the game, yay or nay >> you'll have to deal with mike santelli saying where is the money. if it was someone who -- >> yeah, although the record of loans is not perfect >> that's a good point >> reporter: the term is their happiness half. >> we have much more to unpackage here diana, thank you very much our diana olick. you e-mailed, facebooked, and twteeed. we're going to read your messages in the "closing bell" mailbag. oh, boy.
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when you have the right financial advisor, life can be brilliant. ameriprise i'll have the langoustine lfor you, sir?i. the original call was for langoustine ravioli. a langoustine is a tiny kind of lobster. a slight shellfish allergy rules that out, plus my wife ordered the langoustine. i will have chicken tenders and tater tots. if you're a ref, you way over-explain things. it's what you do.
if you want to save fifteen percent or more on car insurance you switch to geico. sir, we don't have tater tots. it's what you do. i will have nachos! we've got a news alert on disney and alltise julia boorstin has that for us >> reporter: a comprehensive distribution agreement after they battled over the value of disney's channels. disney and altice saying this new comprehensive multiyear agreement reinforces the multiyear model.
they say the two companies plan to collaborate on espn's direct to consumer product scheduled to launch in 2018 they say they've agreed to leverage altice's data analytics platform this comes at a time when there's a lot of talk about cord cutting and the value of that cable bundle it seems like these two companies will keep it going for some time. back over to you >> shares of altice are lower. >> it's interesting twist, the agreement to cooperate down the road once they finally come to an agreement, the cable networks and the cable distributors, if though say, i was sorry about all those nasty things i said about you. >> the "closing bell" mailbag, speaking of nasty things people have said. one says, they can get huge money for two 30 second spots on top shows the. i think that would hurt the subscriber base. >> that's a tremendous leap that netflix has no interest in
taking >> would customers switch if prices get too high? delia commented, no, but there are fewer things i'm interested in >> i was saying earlier that price is not the top of the list of complaints about netflix. it's either the speed of the feed or it's the library >> and importantly, my glasses have caused a little bit of a stir this is my favorite. dilip and many others e-mailed in to say, sorry, the glasses look like they come from rick perry. honestly, i see it i turned the wrong way, let's try this way >> you can get a lot closer than rick perry >> he is my lodestar, my inspiration. >> that what lodestar means? >> lodestar is like your beacon. >> there you go, i need the glasses to see it properly costco's numbers were moving
lower at last check, currently back up by 1 hers. yum china's gains have been pared. >> also the pattern, costco is interesting. will it be able to hold on to this premium multiple it's had forever, 28 times earnings >> i only moved on to quell my embarrassment. "fast money" with melissa lee starts right now roger mcnamee says the fake news problems are just starting. plus kelly just mentioned, check out shares of costco, volatile after hours that conference call getting under way now. we'll bring the details. first, the dow to fresh record highs, a seven-day winning streak, closing at the record high for the sixth day in a row, the longest streak in 20 years. nasdaq and russell joining in. as congress