tv Squawk Alley CNBC October 16, 2017 11:00am-12:00pm EDT
welcome back to "squawk on the street," i'm dominic chu a rise in energy stocks lifting the markets higher, trying to, at least all among the biggest gainers, this as oil jumps on mideast tensions despite the energy gains, sector is still negative for the month. that does it for this hour for "squawk on the street. let's send it downtown for the start of "squawk alley." back to you. >> good morning, it is 8:00 a.m. at amazon headquarters in seattle, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪
we are going to talk to kevin hassett in just a few moments. top story today, political pressure mounting on big tech yet again. two democratic senators expected to unveil a bill this week which would require companies to disclose more information about political ads they run online. ad says company reps prepare to testify before congress in a couple of weeks. joining us this morning, aneesh chopra, who served as the chief technology officer during the obama administration he's in washington, d.c., today. good to have you back, good morning. >> thanks for having me. >> you have these companies under pressure in the press, these meetings on capitol hill
everybody except shareholders, it seems what do you think the repercussions are going to be? >> well, we have two trends that are going to be difficult for the tech sector to manage. one is the issue of parody we have regulations that occur in the offline world, like political ad regulations on broadcast that have not yet been applied in the online world, and that gap is closing. we're seeing some of that activity in this bill goes to the heart of it. we're also seeing pressure on the issue of concentration of power over in europe we see a lot more pressure on antitrust issues and the importance and the strength of the u.s. tax sector, but on the positive side, to grow our productivity, we're seeing more positive momentum on tech sector involvement in areas like improving health care and education and other sectors that haven't yet seen the full benefits of the internet for their own gains. >> so, where do you think the pressure points really come? is it about sort of establishing symmetry between the way traditional broadcasters are
regulated and the way the new companies are regulated? >> yeah, the long arc here has been we try to treat the online world in a little bit of early staged test bed like with internet e-commerce. we really didn't allow for taxation of products over the internet for the last many, many years, but that slowly chipped away as the platforms began maturing, so what we're seeing now is an acceleration of that maturation process so more and more of the sectors were, quote, unquote disruption was taking place and they were given freedom to innovate, now they are forced to be more traditional in the form of innovation, whether uber on the taxi fares or what you're seeing on political ads it's a natural conversation that's just taking place faster than it had in the last 20 years. >> but, aneesh, the problem isn't political ads. not like the russians were running ads that said trump fo president or hillary for president. it was divisive social issues being targeted to specific swing voters it doesn't even look like this
bill would address that issue. isn't it more knowledge of who people are who are placing and paying for advertising and where those people are how do we get to that issue? >> well, a big debate on the internet is whether we need to have more authenticated accounts or folks that are known to be users on the internet, or we celebrate the anonymity of the internet, and we've been having this debate really since it was introduced as a platform, and the reality is, no current actions in washington are going to really undermine that fundamental principle of internet freedom >> what do you think should happen >> i think what's going to happen is more industry self regulation and much more active attempts inside the sector to root out fraudulently created accounts as one avenue and yet more problems will emerge through other channels and they'll work on them in a more nimble way industry self regulation has got to be part of the conversation here, and i'm hopeful the tech firms will do what they can to collaborate in areas like account creation authenticity.
>> well, they haven't so far, and when you talk to some folks, aneesh, some people say the reason or part of the reason we're at this point is because a lot of these big tech firms, and they specifically point to google and facebook, were allowed to run wild during the obama years. they were very friendly and had a cushy relationship with your administration in particular, and as a result were expanding in multiple arenas without any check or regulation. how do you respond to that criticism? zbli appreciate the sentiment. it's not accurate. i would say the rules on the books have been strongly enforced what do we do with areas there are no rules on the books? and this question about how do we govern the internet has been a big debate, not just in the u.s., but internationally. in fact, the u.s. position internationally has been to promote internet freedom, a bipartisan position, i might add, because we see the power of opening up information in all markets around the world as net
positive to the u.s. economy so, it's been a difficult debate to acknowledge how do we trade medical records on the internet without having more security assurance, so we've done work to fix that, while preserving the broader internet freedom both parties have celebrated and will continue to grapple with given this problem of fake account creation that has to be addressed, but is going to likely be better addressed through industry self action >> yeah. speaking of that, aneesh, i wonder we've had so many apologies from these executives, who in turn have also said we really didn't see this coming, we didn't expect this to be as big a problem as it became do you believe them, and what kind of grade would you give them in the response to all of this >> well, on the p.r. side it's probably a lower grade than on the substantiative side about their actions. we don't yet know the net impact these platforms and the openness of their platforms to influencing our u.s. election. i'm hopeful the senate intelligence committee will shine light and share their results widely
i would say that the communications thus far have not been as effective as you would expect, which is to say we've normally seen these platforms as a positive chance for all voices to be heard and we've been grappling how to handle the voices the rest of us are not that excited about hearing and how do we balance that in a country that favors the first amendment. we're just seeing this accelerating pressure on these digital platforms, but these are old, old challenges that all media platforms have tried to grapple with for decades >> yeah. as we await even new rules and guidelines from some companies like twitter in the next couple of weeks aneesh, good to get your take on this we hope you'll come back and talk about it more >> my pleasure thanks for having me >> aneesh chopra developing story this morning. colony capital, the firm run by trump friend and ally barrack. >> that's right, sara, tom
barack is swooping in to save the weinstein company, announcing an immediate cash infusion, the two companies entering a negotiating period for a potential sale for all or part of the weinstein company assets a weinstein board member says we believe that colony's investment and sponsorship will help stabilize operations, as well as offer comfort to our partners around the world founder and chairman of colony capital, billionaire barrack saying we believe the company has potential value and growth potential. we look forward to working with the company's partners to help preserve and create value for all stakeholders, including its employees. shares have moved higher on this news, up about half a percent. for instance, they bought miramax from disney back in 2010 now, barrack, a long-time
adviser of president trump did make headlines last week saying he was shocked and stunned by some of the president's rhetoric guys, back over to you >> julia, i'm wondering what are the weinstein company's most valuable assets at this point? of course, we know the brand has negative value at this point, but what exactly is barrack investing here >> there is the library, the movies that have come out, and the value there in terms of home entertainment, sales of, you know, dvds would have been more valuable in the past, but now sales of digital downloads, then the movies in the pipeline they have a couple movies slated for release over the next couple months, more coming out over the next couple of years, and then they also have the television asset. so, the weinstein company does have a tv business that they've been trying to sell, actually, since 2014 you may not realize it, but they have reality shows, many more tv shows than you might realize
of course, they are a film business everything that's in development and the rights to what's already been released. >> and finally, in terms of barrack and colony, they were instrumental in the original separation from disney, right? >> that's right. they bought miramax assets from disney in 2010, many years after the weinsteins separated from it, but they do have sort of the access to a track record, you know, barrack also bought neverland ranch, so they have this sort of history of swooping in when no one else wants those assets >> yeah, you could say that again. getting a lot of attention today. julia, thank you when we come back, the governor of illinois making the case to bring amazon's second headquarters to the windy city plus, the white house releasing its first economic analysis of the president's tax reform plan. kevin hassett joins us on that next and later, the #metoo
counsel of economic advisers, kevin hassett. >> great to be here. >> walk us through how you get to this number you're talking 5% wage growth. we haven't seen that in an awfully long time. >> exactly how you get the $4,000, there are three or four models in the report, but the background problem is this, we find a clear structural break in the relationship between corporate profits in the u.s. and wages. if you look in the past, used to be if you get 1% corporate profit growth, then wage growth goes up by 1%, as well, but now that's almost disconnected completely over the last eight years corporate profit growth has been 11% but wage growth has been nothing at all so we've been studying why that zis connect happened and the base sick point is the profits are now in ireland u.s. corporations are going offshore, increasing the demand for workers over there, increasing demand for workers over here and keeping wage
growth from going up along with the welfare of the corporations. the president put out a tax plan to reconnect profits and wages by encourage people to locate here >> we've seen them doing quite well, even with that overseas cash, and that hasn't translated into higher wages, so why would that change under your plan? >> yeah, sure, so the point is right now we're at 35% rate, almost 40 if you count state and local taxes, and u.s. corporations then have a decision, should i locate in ireland where i'm paying 10%, or here in the u.s. where i'm paying 40%, and they are locating profits overseas, so you see it they have lots of earnings, but not so much here they are leaving most over there and using the money to pay workers over there, not here the question is what happens if we go down to 20%? they are going to bring that activity back here, increase the demand for workers here and drive up wages, as well.
>> wonuldn't they also drive up buybacks and dividends yes, machinery, new plants, maybe a bit in wages, too, but it's hard to find an economist, including the nonpartisan tax policy center, which i know you don't agree with, that actually thinks $4,000 for working household income boost as a result of this corporate tax cut is realistic >> i just disagree with that if you look at our report, we cite different studies, use their analysis to predict what would happen if we were to cut the rate to 20 and estimate a wage effect. even today, it wasn't cited in our report, there's a new study at boston university where it says the plan would increase gdp by 4% to 5%, which is the range we're finding when we model it >> kevin, looking at this from the position of your average middle class american, we've seen the charts that show that the share of total u.s. income
of the bottom 90% has shrunk, while the top 10% as grown there's the point you made about corporate profits being disconnected you see all this and somehow it seems weird that the solution is going to be cutting corporate taxes. how do you make that argument to the middle class >> well, i think what's going on right now is that we've made a tax code, constructed a tax code, that has told businesses to create the jobs overseas. if you create the job overseas, we're not going to tax you much at all, but if you create the job here we're going to tax the heck out of you. every american understands if we're chasing employers offshore, it can't be good for american workers, but this is not a theory i emphasize once again there's a large literature, all cited in our report, where people have looked at other countries have cut corporate rate, what happened to workers there, what happened to their corporate tax revenue and you can see everything is consistent with
the story the president has been saying, if we cut corporate taxes, lure businesses back here and the businesses drive up wages. >> you're talking about going 35 to 20 on the statutory rate, but the effective rate is not quite that high. what would the effective rate do under this plan, any idea? >> sure. there's lots of different measures of the effective rate, the effective average rate, marginal rate, and if you call it the user cost to capital, the cost of capital is going to drop by about 11% that's about how much it goes down that would drive capital spending higher, lead to economic growth, and higher wages. again, there are lots of different ways to get to the wage effect. you can do it with general equilibrium modeling, the time series literature, and you can do it with the cost to capital and investment literature and all of those basically lead to the same point, a wage effect about like this. there are going to be economists that say maybe it's $2,000, other economists say it's $9,000, there's going to be public debate about that, but
there's nobody that's saying that it's zero, right? the fact is, right now we're chasing businesses overseas. it's not rocket science, it's just economics if you do that, you reduce the demand for labor it shouldn't be in dispute >> then there's larry summers, former treasury secretary of the u.s., kevin, who i know you've gone back and forth with a little on the economics, and he's on the other side, but i did ask him about this stat, the $4,000, because president trump mentioned it in a speech to truckers here's summers' analysis of that >> the idea that somehow some lack of incentive is what's causing corporations not to invest, by the way, corporate profits, they are after tax, they are at record highs so the idea that this is going to produce a $4,000 increase in wages, i think it's an absurdity. >> you know -- >> he said it's an absurdity >> hard to respond to something he said it's an absurdity but
doesn't say why. he doesn't say why because he doesn't know why, because it's not an absurdity, and it's not because there's literature we cite that shows you get an effect like that that looks at what happened in other countries. when they lowered their rate, what happened to the workers in those countries? under the obama administration, where larry summers worked, we had about the weakest wage growth you're ever going to see, and especially wage growth ridiculously small compared to the profit growth that we saw. i wonder what the theory is that says we could have an economy where the corporations are doing great, but wages aren't in a way that's unprecedented other than what we're talking about i'd love to see the alternative theory, but instead we're getting ad hominem attacks >> kevin, what's the proper role of tax policy and encouraging companies to invest in their employees' education as a way to boost wage growth over time? you haven't had a lot of conversation about that. corporate tax cut, yes, all the companies around here want that, but what about what's going to make the american worker more
valuable >> that's a fantastic question, because really if you think about it, higher wages come from either more capital spending or more human capital so if we invest in our workers, make them more productive, either with education or on the job training, that should drive up wages we've certainly underperformed in that. and if we give workers more machines to use at work, that will drive up productivity and wages, as well i think that there are lots of ideas that people have been studying lately about trying to increase employer investment and on the job training, to get our schools better and all of that stuff, for sure, can have a long run positive effect on wages, as well >> kevin, we know that the administration has said the corporate rate is one of the elements of this package that's nonnegotiable. you're talking about it here with us, can you envision a scenario corporate is sliced off into its own legislation >> i'm not an expert in politics or a vote counter. there are three types of
economists, those who can count and those who can't. i guess if you understand the joke, i'm in the latter. i'm not a vote counter, but i can tell you if we get this bill through, it will be great for american workers >> just the corporate part i guess i'm wondering can we evaluate corporate as a valuable tool that will raise household wages absent any other elements of personal or repatriation? >> i think that there are lots of pieces of the puzzle and they are all important. don't forget on the individual side there are going to be improved incentives to work hard, which is important, and there's also going to be changes in the tax of small businesses, which is a big share of business activity in the u.s. so corporate is a big deal it has a big effect as we show in our study this week, but the other side is important, as well, if it's done correctly >> so just on your study that you're talking about and the impact on workers, kevin, you do admit it has a bigger effect in terms of the household income boost on wealthier americans,
right? according to your study, average income, $83,000 would see that $4,000 to $9,000 boost, but median incomes of $59,000 would see an increase of $3,000 to $7,000 how does this not help the wealthier americans more >> let me clarify that in those calculations that you're citing, what we're doing is going from a literature that tells us what the percentage change in wage growth is given the change in the corporate tax, and in the calculations that we did, we apply it both to the median income, which is about $59,000, and to the average, and since we're doing a percentage change on two different numbers, it's the same percentage change, but you get a smaller number if you start with a lower income. it's not a concession about distributional things. we're applying the same change to different points on the income distribution and we document that calculation with a study that looked at the impact of corporate taxes on all the places on the income distribution and found they were about the same it helps low wage workers and
high wage workers alike. >> tax policy center call your office kevin, thanks. please come back >> i'm sure we'll hear from them, yeah >> kevin hassett joining us from the white house. thanks, kevin. when we come back, the governor of illinois makes his case to amazon to bring the company's next headquarters to town first, watching shares of apple moving higher on an upgrade out of keybank target 187 as they talk about more aggressive market "sawaly"enti quk le is back in a minute
the race is on amazon now accepting bids from cities and states that want to be home to its second global headquarters the deadline is thursday, and as amazon evaluates the bids, so will we, using our top states for business data. scott cohn will be going from city to city in the coming months, starting the journey today in chicago
scott? >> john, chicago and illinois are keeping their cards close to the vest on what their actual bid is, but this could be one of the sites they offer to amazon this is chicago's old post office it's a landmark, built at a time when mail order was king and chicago was the global capital of mail orders, so nice symbolism if they can get amazon to move in here, but it will take more than symbolism to win this race. bruce rauner is the 42nd governor of the state of illinois, is leading this bid for amazon why do you think that chicago should have an edge, and what can you tell us about the bid that's about to go >> well, scott, good morning, thanks for joining us. illinois is far and away the best location for amazon's second headquarters. we have a workforce that's second to none, outstanding, well-trained workforce we have the best transportation infrastructure in america to get access to the markets across north america. illinois is the hub, the best location we have the best transportation infrastructure of any state in
america. we have a university system to train young people in technology and new, innovative business techniques that's second to none anywhere in the world. and we just have a compelling case for amazon to come here and have great success >> now, as you know, we evaluate the states every year for our american top states for business rankings, and you know about illinois' competitive issues the state doesn't do well. ranked 31st in our rankings this year, and when we put that data against amazon's categories, the state doesn't fair all that well yes, you have the million plus population and then some, so a-plus there, but stable business-friendly environment, you know the issues with the budget and everything else hard to give the state a passing grade with that. yes, you've got the workforce and the education and higher education institutions, but you've talked about the issues with workforce and unions and right to work and things like that and, yes, you've got real estate and make no small plans in all
of those great chicagoisms, but it's an expensive place, so when we put it against our data, the state doesn't do well. so how does illinois overcome that i know you differ with the conclusion, but how does illinois overcome those business disadvantages that you've been talking about for three years as governor >> we have the best location, bar none we have the most compelling locations. many locations here in the city and the suburbs that meet amazon's exact needs we have one of the greatest airports anywhere in the world at o'hare airport, and every location we can offer amazon has direct, easy access to o'hare airport. we also have a public transit system in and around metropolitan chicago that is as great as any city in north america. and that is a critical criteria for amazon and then as i mentioned earlier, our university system with the university of illinois, university of chicago, northwestern university, illinois institute of technology, depaul, uic, we have
a network of universities second to none, and, scott, you may not know this, illinois graduates 10% of america's computer scientists we graduate 10%. these are young people who would be -- amazon would love to hire. they could have direct access to that pool of talent. on every one of the criteria amazon put out, we rank in the very top i believe we're going to win this, and we're all-in to win. >> john's got a question >> governor, illinois' position in the middle of the country, chicago's position there, as you've mentioned, certainly plays well to amazon's position as a retail and logistics company. how do you hone your pitch for amazon the cloud company >> well, great question, and you're absolutely right. distribution and logistics is critical to amazon's success that's what they are built on. that and technology, and we win on both counts first on distribution, transportation, and logistics, amazon already loves illinois. they've already made a massive
commitment they are building at least ten distribution and logistics facilities in illinois right now, as we speak >> what about cloud? i'm asking about cloud >> yes, and on cloud, so here's the issue. we have the greatest network of universities for computer scientists, technology and innovation anywhere in the world. we match very well against stanford or m.i.t. or harvard or berkley. we have the university of illinois, university of chicago, northwestern university, and many other universities. we have tech talent to drive computer innovation, communications innovation, that is second to none. the university of illinois has one of the largest, most highly respected engineering schools in the world, and they are right now the pipeline of talent to companies like intel, to microsoft, and already to amazon, and it would make great sense for amazon to come here, tap directly into the u of i pool of talent to accelerate their growth this is the compelling location. we're going to win this.
>> governor, the state's finances are not great this is an issue that you've been dealing with. whoever wins this race it's going to cost them how will illinois be able to afford it without short changing other things in the city >> well, i tell you, this amazon opportunity is a home run for illinois or wherever they choose to go, because it's going to create a massive new economic growth, new jobs, stronger, higher family incomes and expand our tax base, so our tax revenues will go up by billions of dollars when we win amazon, so we can easily afford it them coming here helps us with our challenges, and we are, as you point out, scott, we have some challenges, but we're fixing them, overcoming them, shrinking our wasteful government spending. we're reducing our regulatory burden our target right now in our administration is to cut 20% of the regulations on businesses by next summer. we've already cut over 10%, so we're making great strides, and when you compare our progress along with the compelling attributes we've talked about in
terms of location, education, workforce, o'hare airport, amazon, this is a home run for them to come here. >> governor bruce rauner, we thank you very much. we wish you luck as the bid goes in, and, of course, we'll continue to go from city to city and hear the cases that amazon is going to hear with a decision expected some time next year carl >> that's a good beat, scott nice work if you can get it. our scott cohn in chicago this morning. let's get to seema mody and get the european close here. hey, seema >> let's look at european stocks remaining near four-month highs amid political concerns. the german dax trying to close above 13,000 for the first time ever among the major markets, spain's ibex is the biggest decliner so far. the catalan president has failed to clarify whether he has declared independence from spain. madrid has given catalonia until thursday to clarify his position or face suspension of autonomy in the meantime, banks the biggest drag on the spanish equity index
down nearly 3% the spanish ten-year yield has now fallen to a four-week low. these political worries about spain also weighing on the currency the euro overshadowing basically this upbeat data we got on euro zone exports this morning. switch to oil, european oil majors higher today, led by statoil as crude prices rise on escalations between iraq and kurdish forces in politics, greek prime minister tsipras is expected to visit president trump at the white house tomorrow talks likely to focus on bilateral cooperation when it comes to defense greece's geographic location makes it an important and strategic partner when it comes to negotiations with the middle east meantime, look at the athex composite up 19% so far this year and we finish with ireland, where ophelia has been downgraded to a tropical storm, but not before becoming the worst storm to hit the country in half a century, despite
ophelia, modest moves in the eyrish stock market today. back to you. >> thanks so much for that let's hop over to sue herera and get a news update. >> good morning, everyone. here's what's happening at this hour winds subsiding around the wildfires burning in california. the danger isn't over yet, but authorities are lifting evacuation orders in napa city and nearby hot spots firefighters have been battling that blaze for a week. a dramatic escape in the wildfires going viral. two roommates driving through the flames in an suv to an open gate it happened in yuba county at the beginning of the wildfire season overseas, portugal authorities reporting the death toll there 32, the latest causality involving an infant. dozens injured and several people are missing officials are blaming unusual high temperatures for the fires there. and a scary moment for drag race car driver steve torrance at the texas nhra fall
nationals. his left rear tire blew out. look at that he was going 300 miles per hour, then the engine blew, propelling the car into a retaining wall. miraculously, torrance was not injured. he actually got out, got into a back-up car, and after all that, he ended up losing in the finals unbelievable that's the news update this hour back downtown to "squawk alley." sara, back to you. >> i can't believe he's okay >> i can't either. >> that's crazy video. sue, thank you still to come, first it was the women boycott twitter, now # metoo trending over social media. we'll discuss it with kara swisher. first, additional fallout to tell you about with wells fargo related to those sales practices. finra ordered the financial network to pay customers $3.4
question. what is an answer and how can you measure the value of one? today trusted answers from trusted sources are rare and precious commodities. they're out there but finding them on your own has never been harder. it's why at thomson reuters we provide you with the intelligence, technology, and human expertise you need to find trusted answers.
the answer company. thomson reuters. big tech turning on the charm as the conversation around the industry continues to turn sour in a series of tweets, twitter's jack dorsey is promising yet again to improve the company's abuse in safety rules from the tweet storm, dorsey announcing "new rules around unwanted
sexual advances, hate symbols, violent groups, and tweets that glorify violence." this, of course, as "the new york times" details amazon's recent push to befriend lawmakers on the left and right sides of the aisle joining us now in all of these topics from washington, recode's executive editor kara swisher. good morning, nice to see you. >> how are you doing >> so, i'm confused. you know, last week we were all angry at social media and on twitter about rose mcgowan, kicking her off, now this #metoo is trending, and i can't figure out if it's being used as a force for good and if companies are responding as they should be what's your take >> you're confused about the fact they are trying to get you not to be mad at them? that's, of course, what they are going to do. this lobbying thing, you know, has been going on for a while. it's not a new thing i think in 2015 amazon doubled its lobbying money i think we did a story, lots of people did a story, so all of these companies do realize that they have to be -- this
regulation is coming and they've got to somehow be part of forming it, because they like self regulation, they like being left alone they've grown large without a lot of regulation and they see it coming, especially with the russia situation around social media, with now a lot of this bullying issues, a lot of these issues of what rules are in place using social media i think the rose mcgowan issue just put into sharp relief that a lot of these companies, these rules are very fungible and hard to figure out who's in charge, really, essentially. >> i guess, and whether the company's responses are adequate i mean, dorsey coming out and responding and saying we're taking new measures. i can't count how many apologies from mark zuckerberg lately. is it working? >> you know, this goes back a long way zuckerberg years ago, remember beacon he was real sorry for that one, that was an advertising problem that they had. jack is very earnest and he definitely, obviously, thinks it's an important thing, but the question is, why didn't any of
these companies think these tools should have been in place before so that this doesn't happen you know, to be fair, these are massive, massive, you know, amounts of people talking to each other, so it's very hard to monitor, but if you're going to build these cities, you have to figure out how to have a police department, how to have rules, how to have laws, and it's something they've largely abry gaited because, you know, growth growth and -- controlling it doesn't go together, essentially. >> kara, should we be sticking a fork in twitter's business model at this point? it seems they get all of the downside, as far as their share for social media when something goes wrong, but none of the upside the president is using it exclusively president much we had rose mcgowan, granted, being very critical, but on that now alyssa milano, but they are not making anymore money >> no, that's the problem. i've never seen a company more highly relevant to the conversation in this country and
especially the toxic parts of the conversation, at the same time they are not seeing the growth in advertising, the growth in business, the growth in users that's necessary to build a really strong business i do think it's directly related to the quality of the platform, ultimately if you have a -- i keep calling it a cesspool, but if you have a cesspool of an area, even if it's an area a lot of people want to be around, it's not an area you can really build a business on. while they have advertising revenues, they've got a business going, it's just not going in the right direction on any of the metrics that are critical to wall street. and so -- >> i wonder -- >> nobody wants to buy it right now. that's the thing nobody wants to purchase it. >> kara, obviously, they've put all their eggs in the alive basket, which for our purposes is incredibly valuable, but do you believe most people need to know what's happening at this exact moment >> yes, carl what are you doing here? yes, we're in the news business, yeah, yeah i don't think there's anything wrong with that. i think the issue is how you
create a platform that is at one time very relevant and timely, and at the same time creates an atmosphere where people can have cogent discussions and not, you know, be subject to rules that change i think saying we should have rules about unwanted sexual advances on twitter right now seems a little late, to me i don't know, i feel like it's things that they should have been working on a long time ago, and it speaks to the fact a lot of their executives, been a lot of executive tumult, been a lot of people leaving and coming, and hasn't been a consistency in leadership there, or there's been a lot of leadership there, just not a consistent thing. and so they've got to figure that out i mean, we've been talking about twitter like this for years and years. it's not like it's new, right? >> it's a flat circle. >> what? i'm sorry? >> people have long said twitter is a flat circle in many ways. >> yeah, it's a hot mess >> repeat the same small
exercises all the time >> abuse is pervasive and so is vitriol, as we can all attest to we mention the #metoo. also wanted to bring up this idea that amazon sent its memo to employees on the suspension of its own studio executive roy price last week, and here's part of it saying, "the news coming out of hollywood over the last week has been shocking and disturbing and unfortunately, we are a part of it." adding, "amazon does not tolerate harassment or abuse of our employees or our business partners." i guess we're all wondering how widespread this is and whether we're at some sort of tipping point. >> well, i don't know. i'm always weary when they say they didn't know nobody knew anything was going on anywhere. someone knew something somewhere, so i think the issue is, you know, including the media. look, these companies really moved into this entertainment space, it's not just the entertainment space. we have been writing a lot about the tech issues, wall street
always had these problems. this happens to be trending right now because harvey weinstein seems to be the locust of what is happening right now, and amazon had a lot of affiliations with them but what i want to know, they did an investigation of roy price and did nothing, and until rose mcgowan was quite outspoken on social media, then he got laid off, or whatever they are doing, essentially firing him, it looks like. so what happened in that investigation that wasn't enough to do this, and why did they do it now i'd like to know that. that's a really good question. >> that would be interesting to find out kara, thank you for joining us today on all the hot topics. kara swisher, recode still to come this morning, netflix hit some all-time highs once again with earnings due after the bell tonight we'll talk about what we need to see omfr netflix in terms of subs after the break [vo] when it comes to investing, looking from a fresh perspective can make all the difference.
it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.
>> one analyst's controversial call on a major bank stock why he's warning investors to get out while just about everyone else says that stock is going to soar. prus, as the dow push eds towards 23,000 morgan stanley's top strategist says the risk of a correction are higher than he's seen in some time we're going to discuss the warning signs and yale's jof sonnenfeld on why the battle against nelson peltz will be a sea change for activist and more on the nfl's battle with colin
kaepernick what's at stake and who is likely to win. carl, see you at the top of the hour. >> thanks very much. getting headlines from the president whom we expect to see shortly ahead of a cabinet meeting and some of them revolve -- mostly drug pricing, saying prescription drug prices in this country were out of control. saying he's looking at reducing government spending heading into the next budget season and looking at some welfare reform ideas. he argues, guys, that some people are trying to take advantage of the system while others are not receiving enough to live, but we will watch some of these drug stocks as this is not the first time he's made comments about drug prices in this country. >> yeah. it's not an interesting twist on this though, saying that the united states subsidizes the cost of prescription drugs for other countries and says it's unfair it will be interesting to hear more of his thoughts on that because some times of drugs, particularly aids drugs, you know, that are -- that are being subsidized in africa there's a very clear reason
behind why those subsidies would be in place. we'll have to see how the comments translate in the poll. >> i meantime, as we await that tape, let's get to the cme group and get to the santelli exchange good morning, rick. >> good morning, carl, and as we await cabinet information, someone mentioned we're almost 23,000 in the dow, yes, we are, and maybe a distant reason in the long list of reasonses why the markets are up so much and this reason since november is the idea of tax reform not just tax uts, and it is an interesting discussion and everything foolhardy to say that in some way it won't figure into the pricing and most likely that pricing will be higher than it is today we can argue about amounts, but what i want to talk about here is the notion of conventional wisdom in and of itself it's always problematic, but when you add in political issues, the results, well, you know the results, and whether it's politicians that have been in place a long time
or economists that have been at the helm or analyzing for many decades. we could go through the litany of issues in the past that conventional wisdom and politics intersect, and the outcome wasn't pretty. i would like to start with energy you know, energy, nobody wanted energy to go down, okay. whether it was steven chiu, the secretary of energy under barack obama who was envious of $8 to $10 gas in europe. we could talk about the affordable care act and how it was passed under the notion by the same experts and politicians today as to prices going down and doctors staying around we could talk about the american recovery and reinvestment act of 2009 and how many very famous economists we hear from almost daily still said that this would be amazing, and when it wasn't, the answer is always the same. we didn't go big enough, okay, and then finally, the ghost of tax cuts past. and all of these issues should be important to all of you, especially the last point.
you know, whether it was the revenue act of '64 and how well it supposedly worked it was a different work. didn't have china and all the competition today. all i'm saying is making capital more efficient and cheaper has it plus sides though it's very difficult to understand how plus they may be in the voices that we hear whose track records of being correct are virtually less than the cubs prior to last year back to you, sara. >> okay, rick. thank you very much. we are awaiting comments from the president after his cabinet meeting. just checking out the ibb etf, still higher even after we got a headline that president trump said prescription drug prices 'le out of control wel bring you that video as soon as we get it from the white house. we'll be right back.
no. go to lendingtree.com for a new home loan or refinance. receive up to five free offers and choose the loan that's right for you. our average customer could lower their monthly bills by over three hundred dollars. go to lendingtree.com right now. netflix set to report after the bell the stock hitting a all-time high senior research analyst at rosen blatt securities welcome. >> if i understand this correctly, for the third quarter you expect netflix to beat its guide and become a little shy of consensus expectations and then for q4 you expect subscribers to
basically be down. but you have a buy on the skok why are investors not going to be disappointed on that? >> first of all, very difficult to project the netflix subs and they both their guidance in the 12 of the last 15 quarters and they assumed there was a push forward from q2 to q3 because the guidance was a little bit strong i'm looking at a company with double digit unit growth going out for the next five to ten years. high single-digit pricing growth, pricing power which very few companies v.give me 15% to 20% revenue growth off of a base of what will be 12 billion of revenue this year. that's what makes the company so exciting. >> how much noise are we going to get from that price increase and how that affects the guide this quarter >> i'm sure they will guide down a little bit i mean, they say their guidance is as they is see it but you don't beat 12 out of 15 times if
you're not sandbagging it a little bit and you're not making sure the guide is conservative i don't think it should be that big of an impact on the pricing increase going from $10 to $11 a month, it's not that big of a deal, each price increase obviously is a smaller percentage change. >> not even in turn, nothing like that over the next couple of years >> so when they announce a price increase we raised our arpo and took down our domestic sub numbers a little bit i mean, there has to be some small incremental amount but not much and by the way, i figure this can be almost an annual event what this dollar increase. >> internationally, too. >> and i think they will increase internationally. >> and maybe the year they lose the disney product it will be more moderate or skip a price increase that year. >> so they are bulletproof, essentially, you think. >> all based on the quality of the content that they put out to the audience. >> built an incredible model and have an incredible head start on everybody. they are the low-cost produce
thor they spend more than anybody else but are the low-cost producer on a per sub basis and the direct to consumer model takes all the middle margin. >> we'll see what happens in a few hours. thanks for coming in and helping us out with us watching netflix month. >> let's get over to the judge who has jim in tow over at headquarters oh, indeed we do welcome to "the halftime report." our top trade this hour, 23,000 watch as the dow approach eds jet another major milestone. why is one "halftime" regular seeing rising risks for stocks with us for the hour today, joe terranova, stephanie link, pete najarian and so is jim cramer, the host of "mad money." let's begin with the markets today where all three of the major averages hit new records again. tech a big winner with at least 20 names now within 1% of at least a 52-week high yes. ho