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tv   Squawk Box  CNBC  October 27, 2017 6:00am-9:00am EDT

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mat te mattel plummeting. and we have a couple of earnings reports, merck is the first one up it's friday, october 27, 2017, "squawk box" begins right now. ♪ >> live from new york where business never sleeps this is "squawk box." good morning. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. so happy today >> that is for us. >> i think they thought andrew was here i do it's not andrew. it's ed. that's when they play three's company. >> they play happy together again. i'm becky quick. joe kernen is here andrew is not here he'll be back on monday. he's on assignment today joining us is ed lee, managing editor at recode good thing you're here we have lots of technology to talk about. >> apparently he was up plate.
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do i go around this way, then through. >> i did it for you. no jacket. >> how long did it take you? >> five minutes. >> you know how to tie a tie >> i'm old school. i just don't always wear a tie >> i don't know how to tie a bowtie >> that's harder for most people >> do you know how to tie one? >> i do. i used to do that as well. >> i think if someone showed me. i've looked at the instructions on how to do it, it's never -- >> you need someone do it behind you. >> let's look at the u.s. equity futures. positive day for the dow and s&p yesterday. the nasdaq closed lower. markets are getting juice this morning after all of those strong earnings reports after the bell yesterday dow futures indicated up by 47 points the s&p up by 10 and the nasdaq up by 78. check out the ten-year note.
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the yield right now at 2.452% it has been picking up steam. we'll continue to watch that this morning overnight in asia, you will see that the nikkei ended up 1.25% higher the nikkei is up for 18 of the last 19 sessions above 22,000 at 22,008 hang seng and shanghai closed higher hang seng up by 0.8 percent. it's the same story for germany, it's up by 0.8%. the cac in france and the ftse in london are stronger as well stocks are weaker in spain, down bay half percentage point. if you check out the dollar, crude oil a strong day yesterday. ended a seven-month high the dollar this morning is up against the euro, the yen and the pound.
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euro at 116.33 after those comments from the ecb yesterday. they talked about cutting bond purchases but spreading it out through next year. our top story, a blockbuster deal could be in the works cvs health reportedly in talks to acquire aetna for $200 a share. joining us is anna gupta good to see you. >> good morning. >> we had you on to talk about amazon's possible entry into the pharmacy -- two weeks ago. >> we talked about what that could cause other people to do, whether it was likely or who it was disruptive to. is this deal in some ways an answer to that other cost pressures are forcing this, and i guess synergies may be helping as well
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you know, the way trump talks, some of the benefits to the big insurers could come to an end. he doesn't want to subsidize big insurance companies either >> a lot of things at work here. amazon is clearly a huge piece of this. particularly it's a threat, as i said, for cvs and walgreens. and cvs needs to protect its pbm business, pharmacy business. that's a huge piece of it. the second piece is the cap of pbms the pbm resides under a health insurance umbrella earlier they used to all contract and use these guys as suppliers, now they're going on their own. >> where does anthem fit in with this >> interesting, right?
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last wednesday anthem decided they would leave the contract with express scripps at the end of 2019 and inked a five-year deal with cvs to start their own pbm, like optmum moved in that direction. cvs and aetna had been speculated on the street >> really. fofrnlg >> for the last few months the aetna ceo was giving signals he is painting a vision that, you know, that looked much like they would at least do a jv if they didn't merge completely >> anthem is -- what happens to poor anthem? >> that's the question does anthem stick with cvs give than aetna is now going to be part of this company i don't think so
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i think rivalries are so deep. optmum rx has done a fairly good job, but they've been at it for years, even so the health plans don't trust them >> is that a bonus for express scripts? are they back in play with this? >> was a lot of bad blood between anthem and express anthem's choices, they stay with cvs, it will be difficult. they could go back to express, but there's such bad blood there. they could go with optmum. it feels like anthem does not want to do this for the long-term. a short-term, arm's length, light touch with optmum may be more palatable >> would that hurt if anthem pulls out of that would that purt reg hurt regulatory concerns or bring up regulatory concerns
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with cvs and aetna >> as far as i can see so far, no antitrust is easy, it's abou medicare part d. >> i would expect the agencies would look at the overlap by region they may need to divest some we all thought aetna and humana was possible, but it's never as easy as it looks >> does aetna/cvs, does that vatgy make sense to you, if it does, is $11 0 $200 the right p >> let's look at it from cvs's angle. they have so many threats, optmum rx and amazon they have to do something. this is fairly accredited, if it's all debt or mixed debt equity, and they can spref much more of their retail pharmacy business because aetna members
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would be filling scripts there that's all good. >> where is your office? >> sorry >> where is your office? where are you based? how long does it take you to get here i was thinking, what are the estimates that by a year there will be more people over 65 than under 30 after that, there's going to be -- it's the baby boomers. like your baby boomers >> i know what that is all these people, that's when you start taking these pharmaceuticals. the trends are going this way. isn't there a huge bullseye on the back of the pbm's? >> they're the bad guys. >> they're the middle men. >> they're like the hmos >> you have trump talking about -- >> when you start getting populist in your pricing >> you have scott gottlieb
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who -- i can't imagine he would let -- he would get trump's ear and talk about innovation. >> you go up to the middle man >> yeah. >> is this a defensive deal for -- >> i don't -- >> for cvs or amazon >> for all the pbms in. >> cvs is a pbm and a retail pharmacy player. that's the business. they don't have a choice most revenue is coming from retail pharmacy or pbms. as far as amazon, i hear you they're thinking hard. they have 12 wholesale licenses in 12 states they can use that for wholesale pharmacy, not retail pharmacy. they may choose to say, hey, he would could hurt our brand with this government scrutiny in an
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industry where profit margins are a threat then again amazon has always been the leader. margins will compress. they are fine with that. >> they love to play the margin on every game. >> they will disrupt the whole thing like they did for the book store industry they have a huge opportunity all the signs point to them coming in. >> can you be a stand-alone pbm? do you to be part of a retail unit to work >> it's a great question i always thought the stand-alone pbm model after optmum brought their pbm in-house was a threat. express needs to do something. either with walgreens or amazon or maybe anthem comes back to the fold that seems less likely, but we'll see. >> so maybe amazon partnering with a pbm or buying even? >> buying a pbm?
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they could buy a mid market pbm -- >> or do it themselves >> do it themselves. they could do all three. >> their balance sheet just got better to do things. my gosh. i just looked at the bid did you see the bid? >> no. >> closed at 972 bid is 1,045 so it's up $73 >> wow what a player. >> unbelievable. thank you. >> thank you. >> stay close. >> yep story is not yet done. >> how many lines do you have on your phone if you're on the phone, we can get through, right. >> you got it. >> anything for you. >> maybe we'll text you. >> i think he wants you to hang out in the green room. >> put her on retainer get an office here
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>> ana, thank you very much. shares of mattel are moving sharply lower after the company reported earnings of 9 cents a share versus the 57 cents that the street was looking for mattel is suspending the fourth quarter dividend we will talk to a mattel analyst in a few minutes hasbro got hit, not nearly as badly. >> we need to bring out the five-year hasbro versus mattel chart. >> hasbro has some plans >> they have all kinds of stuff. hasbro, like, 10, 15 years ago, i thought mattel was it. remember >> when you own barbie >> hasbro was like, i don't know, mr. potato head. >> when you look at what they have now, they have marvel,
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averng avengers, spider-man, my little pony >> kids are not playing with toys >> they are. they're full on in my house. >> they're not bariebies >> teenage mutant ninja turtles. >> then you get video games. >> that happens sooner and sooner swiss chemicals maker, clariant and u.s. based huntsman are calling off a proposed $15 billion merger the two firms are bowing to pressure from white tail healedihealed i holdings they call the deal detrimental to share holders let's get back to these technology stocks that we keep talking about. you have to see some of these moves to believe them. amazon shares hitting an all-time high after the company reported much better-than-expected earnings on a record 34% increase in
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revenue. it was a huge surprise because the third quart ser is typicall one when amazon is spending to invest >> that's not an all-time high >> what's the high >> 108 p >> 1083. >> you have that burned in your memory >> all-time high is 1083 you're right >> pulled back, got under a thousand here we are. >> hitting above 1,000 at 1,045. the third quarter is typically one where they're investing. aws firing on all cylinders, and revenue in north america. alpha beat beating the street on the top and bottom lines. the company getting a boost from mobile ad revenue. more people clicking on things than anticipated that stock up by 3%. microsoft shares also rising dow component posting better-than-expected earnings and revenues and offering upbeat
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guidance that stock up by 5%. 82.59. >> intel raising its full-year guidance on strong performance by its data center business. the cfo will be on "squawk alley" today at 11:20 a.m. eastern time for more on these technology earnings, our guest host, recode's ed lee. and to focus on amazon is b bob durbill, senior managing director from guggenheim securities he just raised his price tar get for amazon good morning >> good morning. >> what was the old price target, what is the new one? >> the old price target was 1150, it went to 1200. >> you are not talking about raising after the stock jumps past your price target that's a 12-month price target >> yes >> because >> aws, a huge profit driver for this company 42% revenue. mid 20s type operating prof profitabilities. continues to be a strong
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generator. when you look at the top line in north america and international, they exceeded on both of those segments these guys put up a strong quarter. >> i think what struck me is the stronger than expected sales in north america. what does that mean? people are becoming more reliant on them or customers are getting prime memberships? >> all of the above. when you look at the revenue base t accelerated into -- they focused on the success of prime day which brought in new customers, prime memberships, subscription revenue accelerated from second quarter to third quarter, up 59%. when you look at the prime membership, music, video, assortment -- >> we're talking about ecosystems with apple. this is the superconductor collider >> do you have an estimate on prik memb prime members? >> it's approaching 80 million >> 80 million people who have prime memberships? >> 80 million people are
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spending because you're part of that ecosystem -- >> as a prime member, amazon is the first place i look because i get free shipping. >> they talked about monthly subscriptions, they're trying to get other people, beside the $99, and whether it's students or lower income, they're trying to broaden out the appeal of prime. that's gaining traction. >> we can talk about amazon all morning. >> that's affecting everything >> the aws which is so strong. microsoft looks like they're catching up. >> microsoft is catching up to them for sure. they built out their sales staff more for that. amazon is seeing them head to head because of that competition is heating up it seems like there's room for both to grow. >> both to grow, does that put pressure on margins? is that a concern at all >> margins are holding up nicely i think there's a lot of sticky customer base.
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a lot of the features they have with the aws offering is also, you know, huge success but it is a competitive market i agree with ed, from the standpoint that it appears to be a growing market with significant room for many players. >> when you hear intel talking about its gains and raising for the full-year what does this tell us. >> intel made the smart bet of moving towards data center supplying the servers -- >> or aws and microsoft. >> that's where everything is headed the laptops and home computers are going away everything is clout based now. a lot of the computing happens in the cloud, which means on servers. intel realizes the pc is dying out or slowing down. let's move our business towards supplying the server business, the awss of the world, the microsoft azures of the world. does that mean the big will get bigger or is there a trickle down effect to smaller suppliers? >> there's a trickle down effect, but what's happening
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with cloud stuff, aws has great features it's not just server space there's actual technology, actual programming, actual apps in a way that businesses are relying on it's harder to extract themselves out of it you're seeing these baked in incumbents coming in. that's going to be pressure in the future >> i don't want to not mention google/alphabet in this scenario what they showed was impressive. the idea that more people are click. there was pressure on the ad prices coming in but also more people clicking. >> they have their own cloud business those three guys are competing google has done a good job of figuring out the move to mobile. cost per clicks are down for google, but they kept up with it they're going where the audience is >> bob, you cover retail what do you think about other retailers minus amazon
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>> we talk about room for two, what comes to find for me is walmart and amazon where the market is growing and e-commerce is growing, there's a logical play there walmart has been impressive in terms of the steps they have taken. >> do you like anybody besides amazon and walmart >> in terms of retail generally? coach is another -- different name but when you think about -- >> you have to think you have to stretch to come up with another name you like in the area >> it's tough being a retailer what is coach's new name you can't remember it. >> why did they change it? i don't understand >> coach was perfectly fine. >> tapestry. >> tapestry. >> very good >> how could we forget i have some information on amazon it's interesting it was an intraday high. the closing high is 1055
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so that wasn't even that closing high but it never did close at 1083 on july 26th it closed at 1,052. the high -- it closed on its highs. what's weird is the next day is closed at 1,046, down 8 points >> so the intraday high, the range that day was 1083 to 10 -- >> you can look at big dollar numbers when you talk about above $1,000 >> the closing high is somewhere around 1,050 >> bob, thank you very much for being here ed will be with us for the hour. >> do you cover durable goods? >> that's my monthly publication. >> you call your monthly thing durable goods? >> i do. >> impressive. >> if you jumble his name what do you come up with?
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>> jeribgerbil is what it sounds like. coming up, m shg, mattel sld its dividend, we'll talk about it with an analyst coming up energy is changing fast and we're changing with it. building a smarter grid, investing in new technologies, that's aep's road to the future. and the international brotherhood of electrical workers helped make that happen. the ibew's outstanding union professionals have the skills and training to get the job done right. that's good for our customers and for our bottom line. ibew members are our power professionals. they should be yours as well.
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oh m mattel hammered after third quarter earnings fell well below expectations the company is suspending its dividend as it deals with the fallout from the toys "r" us bankruptcy filing. joining us is eric handler funny how the fortunes of a company and stock, lows are not necessarily a good place to buy them because they're followed by more lows. with mattel, we are looking for a turn around, but that looks to be in the future >> this is a company that missed the last four christmas seasons, the last five years. so we've seen turnaround efforts, a number of times here
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before and you don't want to get sucked in i like what the new ceo and cfo have to say. there's a good opportunity to cut costs here this is a story about revenue. revenue has been challenging for the last several years at mattel revenue has declined 20% over the last four years. and really this is a company that is on a downward cycle for its products sort of needs something to reinvigorate itself. >> i don't know what that is i would have -- if it wasn't for hasbro, i wouldn't have necessarily singled out mattel things like atari, nintendo, x-box, we are all well aware of how kids -- what they play with now. it's not necessarily what you would think of in the old days somehow hasbro has been able to
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navigate the waters more effectively than mattel, haven't they >> yeah. it partly has do with relevancy. you look at hasbro, they've done a good job with their brand blueprint. you see the growth in nerf and the relevancy there they created on youtube and the disney princess there's a number of other products where they have done well when you look at mattel, you know, barbie is on an upward trajectory same thing with hot wheels they've been having, for it seems like several years now, declining after high thomas the train has been in decline after being hot for a few years. they've got some issues that is sort of negating the recent growth we've seen with barbie, hot wheels and a little bit with
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fisher-pric fisher-price >> i would think if disney princesses can be a great grower, i figure there must be a way of rejuvenating barbie is it just thought of as old-fashioned at this point? brats are something? i know they were hot for a while, too >> no. they have done a good job in the last year and a half of rejuvenating barbie. they have a great ad campaign with that. they said last night in their earnings call that barbie has seen double digit point of sales growth worldwide this year it's been excaccelerating each quart quarter. with mattel the first thing you need do is barbie. it's a significant amount of revenue, but they have other things that have been weighing them down. >> these guys, do you think they ever considered hiring video game software types?
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is that just to the what they'll do they'll always be these physical toys >> they're moving in the direction of creating more, you know, mobile-type games for their toys they tried sort of the video game path many years ago mattel tried it, and that proved painful for the company. it's just not what they do. >> will anyone ever talk about ongoing concern or -- you know, you're at 12 now where you're headed it's still a $4 billion, $5 billion company. you know, cutting the dividend, things like that make you start wondering, are they going to have to refrench will they have the finances to turn around effectively and
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spend the money. >> sure. >> will they need to do that or are there ongoing concerns >> i think they're financially stable, but the problem is their issues have been self-inflicted. you know, like we see with hollywood studios or video game companies, it's a cyclical business sometimes you hit a hot streak that lasts for multi-years hasbro right now, i would say, is on a three-year cyclical upswing. they had to go through several years of a downturn as well. i think mattel can work its way out and needs to improve yattivity. kids still want to play with toys there is a nice physical aspect and creative aspect with toys. i don't think that is in secular
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decline, but for mattel it's just very much, you know, just improving the relevancy and creativity of the product. >> eric, you know, i've seen when adults try to design toys did you see "big?" they bring in tom hanks. the ideas adults had were terrible they need to bring in some children, don't you think? they probably do do that they do focus groups >> i'm sure there's lots of testing. when they're testing -- >> tom hanks, bring him in >> maybe >> tom hanks was an executive vp at that company. >> he was. they tried to make a building that turned into a horse or something, he said why would you want a building that -- no one wants to do that i don't know adults can't design toys, i don't think. >> i'm a finance guy, i'm sure
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they have more creative people than me. >> you're not in the running at all. >> i'm well beyond that demographic. i do buy the toys for our kids that's what's needed >> okay. all right. thank you. france's total reporting a 29% jump in third quarter net profit because of strong output and cost savings the oil company says net profits came in at $2.7 billion. that's in line with expectations western digital shares were under pressure after the company took down estimates for the current quarter. the chipmaker posting better than expected results beating expectations. and keeping an eye on apple. today is the day customers can preorder the iphone x. the newest model will be officially available on november 3rd. in the united states, the device starts at $999 for the 64
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gigabyte model or $1,149 for the 128 gigabyte version you can pay by installments through the upgrade plan which is a good thing. that's a lot of money. >> what's the injury. >> refere giraffe d's name. >> geoffry >> what is he doing? >> he's out of work. >> competing with the -- >> walmart toys. >> when we come back, we are closing out the trading week we'll get you ready for the big economic report and some important quarterly results. merck is set to report in the next few minutes we'll bring you those results. as we head to break, look at yesterday's s&p 500 winners and losers
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joining us is simeon hymand, and i knows there a big economic number, let's hold off on that the real story now is earnings earnings have been incredibly strong, particularly if you look last night at the technology names. >> super strong. i don't like to look surprised, but sales growth, top line, a great longer perm predictor is up 6%. more than enough to support current valuation levels we still have this gap between growth and value stocks. even with the tech earnings coming in so strong, i get queazy about the fact that growth stocks are trading at three times the price to book of value stocks >> though in some of these cases they are not only beating expectations, both the bottom and top line, revenue, but also
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raising guidance because they have more that they can ein seen advance. >> yeah. this is probably not a repeat of 2000 these are real earnings going on but still companies that have a better combination of quality and growth can give you an opportunity to participate and protect. the value under-performance could drag on for a bit longer given that the fundamentals are there on the growth side >> all of this is signaling a strong economy gabrielle, today we will get that third quarter number what will it show us? >> it's a strong u.s. economy. our estimate is 3.2% two strong quarters back-to-back in our view, it does not mean we're set for a new trend pace of higher growth in the u.s., but it's showing we're having a bit of a sprint here as we get a little later in the cycle. it's not just the u.s. economy, it's the global economy doing the best it's done in six, seven
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years. you've seen that reflected in several earnings that we've seen this week. for example, industrials >> what is the impact from the hurricanes how will that play out with the number >> it's been muted in terms of the negative impact that was felt early august, september in the report you're getting the rebound positive effect. very strong auto sales in september. that will feed through to healthy consumption, around 2.7% in the third quarter we hear all the time that the u.s. is doing really well. it's growth coming from other areas that is speeding things up is that an accurate portrayal. >> absolutely. while we feel optimistic about the u.s. in terms of economic growth and earnings, where you see the biggest potential for upside or the biggest acceleration are in those areas that have been dormant for the past few years it would be the eurozone, and parts of emerging markets.
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>> very quickly, one sector you like the best f you're looking at this growth versus value stocks >> i think you still want to look at the dividend growers you have this combination of quality and growth they've been historically at a 20% premium to the market pe right now they're at a hair of a discount they lagged with this tech outperformance that's a place where we think there's opportunity. >> thank you both for being here >> thank you very much coming up, one-on-one with kate hudson. the actress talks about the business of hollywood and starting her own retail line did it four years ago. we'll look at the numbers after this and vladimir putin ordering ballistic missile tests overnight. we will talk to nicholas burns and oil joins are reporting. we will get result s frs from e mobile and chevron let's begin.
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right now it's time for the executive edge we'll start with a round up of the biggest technology movers. amazon shares soaring. the company reported much better-than-expected earnings on a record 34% increase in
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revenue. they did it in the third quarter when no one was expecting much the stock is up by 7.6%. $1,046 alphabet beating the street on the top and bottom lines. the company getting a boost from mobile ad revenue that stock up by 3%. microsoft shares are also rising the dow component posting better-than-expected earnings and revenue and offering upbeat guidance that's good for a gain of 4.6% microsoft at 8 2.42. intel, the chipmaker raising its full-year guidance on strong performance by its data center business microsoft, intel, what you've seen across the board with amazon, gains from the cloud business the cfo of intel will be on "squawk alley" today >> you have a prediction for a trillion dollar -- >> what's the first trillion dollar >> apple is at 8 >> i think apple will get there. >> other people think apple stalls, amazon goes, or google >> amazon has further to go. >> i know.
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but it's got a much faster trajectory >> oh, yeah. what about alphabet? >> i think those -- >> microsoft is 6006789. >> alphabet is in a more mature business, they're dominating interesting note about alphabet earnings, capital expenditures shifted from the other bet section which is all their crazy experimental things, moved it over to google so the cfo is telling larry page, enough with spending on these crazy bets let's give it to google. spend it on creating pixel phones, other things, google home make that work >> let's talk about merck quickly. out with earnings now. came in with adjusted number of $1.11 a share. that was versus the 1.03 the street had been anticipated. they are raising their full-year guidan guidance looking for 391 to 397
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a share. >> not upping the fourth with that outlook how was revenue? >> revenue at 10.3 billion the estimate is -- >> 10.3 is a bit below the 10.544 i think at this point. up fractionally. nice yield, i think still at this point 3% >> they don't like the guidance, or the guidance is what people thought? >> if you add in the beat on this quarter -- >> levels out. >> moves up the overall number >> 8 cents above the top-end of the guidance is 10 cents above where the street is. >> street is 3.87. they beat it by 8 cents. >> right >> the low end is below the -- yeah okay coming up, kate hudson talks to becky about her line of athleisure wear. and the business of hollywood.
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we've had her mother on a bunch of times >> we talked to her in davos >> she's a trip. >> you know kurt russell, too. >> i know kurt from the at&t golf tournament out in pebble beach. he's an interesting guy. how long has he been doing this? >> "escape from new york." that guy go back further. >> how far back? >> disney. child star >> really? >> one of the few that made it, turned into a big adult star i mean, not an adult star -- a star as an adult >> as an adult >> right if we say that, he'll get all confused as we head to break a quick chk t wt'ecofhehas happening in the european markets they're green across the board
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kate hudson is known for movies like "almost famous" and "how to lose a guy in ten days," but she has taken on a new role. we talked to her about the fast growth of had he membership-based clothing brand called fabletics they sell more than $250 million a year in ath-leisure wear
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>> today i was thinking. someone asked me how much do you have in revenue a year, and i said north of $250 million >> we didn't know if we would be profiting at this point, and we are, and we're only four years in i'm a mom of two i wanted to get into fashion movies take me away for much longer hours than i like as a sing am mama what can i do that can create a business for me where i can, you know, work and be creative but be more present at home? i felt like if there's something i want to be that i'm really passionate about, what purpose behind it is important for me to get out there. it's healthy lifestyle and empowering women to feel good about themselves how do we make that something that can reach everyone? it might -- by making it
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afundraiserable. >> time for some parting shots >> we've -- well, it makes it more fun >> it does, doesn't it >> andrew doesn't ever take the -- i'll play along >> you have to actually have a witty comeback >> are we going to be okay in terms of our work force with all the disruption >> all the disruption with the robots taking over >> are there three people that need to service the robots and design the robots? >> wal-mart was talking about the stock. >> there's always going to be -- there's always going to be more innovation, more work, more things to figure out >> have you figured out -- i
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would honestly come to you on this what's after social media? >> he is smart about it, but the next facebook doesn't exist anymore. the next google doesn't exist. it will be creative, right they created the new guts, and anything that comes after is a growth, as a new thing, and that's going to latch on to that it's part of that ecosystem. uber is an interesting example uber wouldn't exist if there wasn't an app created by the iphone >> you think i cannot be part of social media -- i can go all the
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way through the entire phase without ever joining it and then that thing will be there and -- >> you're on twitter >> that's it, though >> there's a little piece of apple. you got it going >> apple 10, joe they'll sign up now. >> he is not buying that waz is not even buying it. >> he is watching. >> and it's good >> thank you very much it's great to see you. >> any time. >> blockbuster deal talks between cvs health and aetna we'll talk about price tag and regulatory challenges straight ahead. for your heart...
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big tech crushes earnings. alphabet, microsoft, and intel all beating expectations details straight ahead as the futures are pointing to a higher opening on wall street. a mega deal in the works cvs reportedly ready to make a bid for the number three health insurer, aetna a breakdown of what's on the table and how it could change the landscape. health care and what's behind the deal motivation kate hudson is looking to get a leg up on the competition. her active wear brand fabletics is growing by leaps and bounds she'll tell us the secret to her entrepreneurial success as the second hour of "squawk box" begins right now
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>> live from gt beating heart of business, new york city, this is "squawk box." >> good morning. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernan joining us is joe terra nova, senior managing director at vertos investment partners and a cnbc contributor, and it's great to see you >> how are you this morning? >> great we have a lot of things to talk through. >> joe >> you down on the numbers >> those three tech giants last night. >> market cap. wow. >> added up. i wonder what it comes to. >> the nasdaq has indicated up 80 points because of all the technology news that we heard. dow futures indicated up by 58 the s&p futures indicated up by
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10.5 >> it's kind of cool the way the stocks go up, and everyone says, oh, the stocks are so ahead of themselves, and then suddenly they're not. you see why they were going up >> we had a retail analyst that raised his price target today for amazon to $1,200 from $1,150 >> really? >> the reason to sell is not the cost subject that continues to go higher, and, again, you point out the statistics 5% drop on the s&p okay we're now at 343 days, right sounds like a lot. 16 months. there's been four instances since 1965, 1994, and 1996 where you have actually gone longer than what we have experienced right now. 380, 390 trading days. you just don't sell because the market is going in one direction. >> there was a time when if you
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didn't know that much about investing, let's say, and you go in and you look at a 52-week high and low, and you always want to buy a stock -- well, i'm not going to buy it on the high. it's near its low. i'm going to buy it. you know what happens? new lows new lows new lows it's hard. it's always hard to buy a stock when it's high there's so much skepticism right now that continues to place itself in the market, and i think a lot of people are sitting on the sidelines waiting for a pullback that they're never getting, and now you've got your job at risk
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>> amazon shares soaring on much better than expected earnings. a record 34% increase. a company that size, revenue up 34%. look at the bottom line numbers. with amazon it's always -- it seems like it's either, well, the revenues are up, you know, they're spending so much money, they're not making any, or they're making money, and the revenue is -- it's both this time as you can see, could trade at a new closing high if it gets above 1,055. alphabet beating the street on the top and bottom lines company gaining a boost from mobile ad revenue. microsoft is a $600 billion company. anybody that thought, you know, that microsoft was going to take a back seat to anyone -- oh. look at that god all mighty you know, when we get jeff bezos is laughing, we need balmer running around the stage >> i think he is the biggest individual in the shares of microsoft still.
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people say, hey, you don't want to be shown up by your successor, but in this case he is really, really -- >> remember how much flack he took as not moving that stock when he was doing a bunch of stuff? >> he said he set them up. >> but, listen, it's been nodella, and there's been a tremendous transformation in this county company where they have recognized the need to diversify. azure has been incredible catalyst for them, and when you think about microsoft, right, you say, okay, here we go. another $4 higher. $82. i think it's a $90 stock at some point, which you have far less volatility than you are experiencing in a lot of other names, like in amazon, like in alphabet, right? it's been great for an investor of mega cap growth investor to be allocated towards, and across the board, okay? all three segments performed well >> that type of growth, and they're still wielding -- >> even if -- >> and, finally, intel may
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finally, finally, finally, be in a sustained longer term chart. still not back it must be getting close to the 90 high. remember what it was back then, joe? 1992 >> too young, joe. >> chipmaker raising its full year guidance on strong performance data by its data center business. the cfo of intel is going to be on squawk alley today. 11:20 a.m. eastern over 40 again. >> by the way, a blockbuster deal could be in the works cvs health reportedly in talks to acquire aetna for more than $200 a share birtha coombs has more on set with us. >> this one was a surprise, and yet, not really. the inyou are shooer spun off their captive -- and now there's much more interest in integrating pharmacy benefits with insuredservices the twist here is that the pdm, cvs with a market cap of $75 billion, would be reportedly the
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acquirer acquiring its largest customer, aetna, which now has a $59 billion market cap after the "wall street journal" reported the two have been talking about a deal that would value aetna at $200 a share. that would make the deal worth about $66 billion. aetna soaring to an all-time high on the news aetna -- that would be a record health care merger dwarfing anthem's failed $54 billion bid for cigna and aetna's own did deal for huma that would both project on anti-trust grounds. now, merging cvs's pdm and health care services with aetna's insurance and analytics, would put the combined firm on closerfooting with united health, which has all of those businesses for cvs, it would also defend against the potential threat of amazon getting into the pharmacy business now, there's little regulatory overlap here cvs and aetna both offer medicare drug coverage plans that could have divest tours there. the merger would complicate cvs's recent five-year deal with
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anthem, announced just last week with anthem quantum partner with cvs to develop its pbm with a frenemy? probably not it would also, guys, mean that if you are cigna, you are the last insurer left without a pbm. what do you do >> they could walk away from that five-year deal. it was written that way. >> where does anthem then go do they go with theron frenemy and then go with optum services. there's a bit of a chinese wall. are you really going to trust them given that they are supper a big partner? do you go back to express scripps after all that bad blood? >> i was thinking about, you know, i know you are in the business, but do you remember when pbm -- pharmaceuticals had no pbm's the bankers said -- they bought them all, and they said why do we own these things? >> ten years ago a piece from charles birda at citi saying you only hold on to the pbm. it's a matter of ego
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it's not really -- >> bankers come in and say we'll help you get out same ones that got them in maybe just a different -- >> cvs paid $21 billion for cam mark at the time do we really think that was a good deal? everyone right now is trying to replicate what united health has done with optum, and you see the success that united health has had. the only question and concern that i have is for cvs they only have about $2.5 billion in cash where, they have a tremendous amount of debt. they have about $26 billion in debt you're really levering up on this, and now you're into a business where you are assuming health insurance risk. that's completely different than the business they've been in >> but you're taking on an insurer that already knows how to do that, and the idea now in health care where you are seeing all these partnerships that are vertically integrated so you have hospitals doing joint ventures with insurers the reason you want that pbm is you want to be able to have that continue up of care. you want to be able to have value all the way tloo
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>> mark is a really smart guy. aetna's ceo. the question is this something that he would be -- where you could -- >> i wouldn't imagine that he would leave. he would have to be an integral part of this, and he is someone who has been angling at the transformation with the huma deal not going through that was about scale and insurance overall, but even there it was about innovation and trying to have more services >> how much of this do you think is about amazon and amazon applying and getting, you know,ing the license for wholesale pharmacy in 13 states? is this -- >> that's part of it obviously, to defend against them i think when you get a big player like that, says that could change with pricing paradigm it's going to make everybody rethink what they're doing again, the amazon threat could be overstated. remember, it was a few years ago when everybody was all concerned because wal-mart, all of a sudden, started offering generics at $4 a piece in the cash market. well, cvs has replicated that,
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and everyone else has replicated that the other day i got a generic from my mom, and it was only $it. the standard used to be $10. it is going to depress margins for everyone having scale makes that easier to take. for consumers potentially it could mean much better value i mean, now that you can get a generic for $2, that's really a lot better than what it used to be >> 1993 merck had to have -- had to have that ten years later, 2003, we don't need this. they spun it off then express scripps bought medici medco back in 2012 >> press time right now. >> yeah. >> you know what it is it's the bankers -- first they said, look, you know how you can unlock value you got to get scale >> i wrn. >> once you have too much scale, you know how to unlock value spin it off. >> i hope you prepare yourself in the business. it's a total racket.
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>> blame it on me. >> bertha, thank you very much let's get back to microsoft. it posted huge earnings results being on both the top and the bottom line. stock up sharply once again today. joining us to talk more about it is jay, director of -- thanks for coming in today. >> nice to see you >> microsoft has been an incredibly impressive story. what's happening >> well, as joe said, they've grown new businesses we were looking for 54% growth in their cloud business. it's 56% a little better. getting to a $20 billion annual rate >> joe and i talked about this getting back to the cloud business the margin kbroouft is very impressive >> it's shocking we keep hearing this is a commo
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dot ized business, and it's not where. >> their margins were up 800 basis points we were looking at 400 basis points >> how could they do that? >> it's scale. it's their ability to retain customers. more premium services, which means better pricing >> better pricing, but you keep your margins up. it's counter intuitive >> they can expand the utilization of capacity. it's classic economic scaling. >> the linkedin acquisition was in line with our model the loss is shrinking, and had it will begin to break even at some point this fiscal year. we're very pleased with how the story has been progressing we've been recommending it for over nooif years since balmer was ceo. certainly he deserves an enormous amount of credit.
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>> i think it's commodity. it is 80 finally back to 40 is it 80 microsoft is now well above where it was at the tech bubble. right? well above >> it's not to suggest that they're sitting on too much cash, but obviously in that conversation of earnings last night microsoft visibly has a significant amount of cash how should they be deploying that cash in 18? >> it is the price of success. we've been saying that they're going to get to over $50 billion in cash flow in fiscal 20, and they can't possibly spend you will aof that for operational purposes they obviously had to be very careful visa vi m&a. they spent a lot on linkedin, but they'll make it back relatively quickly in terms of cash flow. that is the driver devaluation for all of the stocks that we like, we are focussing on cash flow that's the ultimate metric here you have an enormous increase in cash flow.
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free cash flow as well >> well, who is first? >> i don't know. >> we're happy with -- >> you get to pick i'll give you a pick of google -- what's it called alphabet >> microsoft >> apple >> microsoft or amazon >> there's plenty to go around amazon is doing well in cloud. microsoft is doing better in cloud. >> just -- not that it matters, but it's interesting >> real quickly, you said your last published price target was $90. stock is up pretty significantly. $82 today. what you saw last night, is that enough to make you reconsider and maybe go back and crunch the numbers again?
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>> excellent question. >> and you're not going to answer it? is that -- >> i'm happy to sent you the report >> okay. >> we will watch for that. maybe you will come back if you have other news to tell us thank you very much. >> thank you >> coming up, a preview of the president's trip to asia and how he is dealing with north korea former nato ambassador nick burns will join us, and then we have montgomery burns. homer's -- i like that later, taking active ware to a new level. actress and entrepreneur kate hudson shares the secret to her growing fabletics brand. stay tuned you're watching "squawk box" on cnbc "volatile markets." something we all think about as we head into retirement. it's why brighthouse financial is committed to help protect what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets.
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witness katy perry swish. witness katy perry... aaaaaaw look at that dog! katy perry: with music videos and behind the scenes footage, xfinity lets you witness all things me. >> jc penney cut its full year earnings forecast as it tries to take steps to accelerate the liquidation of inventory a lot of that is because of a revamping of its women's department it says that that effort is already resulting in improved performance, but the market not necessarily weighing in on that. stock is down 56 cents, which, believe it or not, has dropped 15%. >> president trump getting ready for his first trip to asia on the president's agenda urging president xi to help with north korea.
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>> thanks for coming every week that you are on, we need to update the relationship between the united states and china. i think it's our last best hope at getting the situation under control. from time to time there are some things that must hearten your forecast for what finally happened are we in a better position now? we're getting some cooperation from xi, are we not? >> we are. in fact, i think the chiends have done more under president bush -- president trump's prodding than any other american president. they signed under the u.n. sanctions. there are now individual chinese sakdss the central bank governors instructed banks in china to wind up loans to north korea chinese are clearly frustrated, joe, with the north koreans. chinese don't want a war on the korean peninsula they want trade. xi has just been given this new mandate to govern. xi jing ping is now on par with
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n mao. now president trump should focus on expanding the sanctions and focussing on north korea >> we talked about the benefits of being somewhat perceived as being unstable some people think it's bad and can lead to something that we -- is not in our best interest. other people think that it throws our adversaries off guard because, like, this guy might do anything at any time in your view, has there been any benefit where they think this is a different breed of leader the u.s. has right now we better, you know -- we're not going to be able to manage him quite as effectively >> i think it depends who you are talking about. >> the president has gone very slow on any kind of major sanctions against china because he is prioritizing the north korean issue the chinese understand that. i think the chinese are going to be eager to cooperate with president trump. i'm not sure how much they can
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do to push the north koreans towards the table. >> you have seen -- we've seen the president says don't talk to them, and then we've seen diplomatic channels are still open, and then we've seen, you know -- they say now the negotiations aren't going to work we need -- and then you see tillerson, again, says, no, we're always going to talk i saw something most recently that some of the channels have been shut down that north korea says, no, we're not -- you know, if the rhetoric like this and if the military exercises continue, they shut down do you know right now whether communications are open or not >> i do not know i hope they are. i think here's where president trump has not done well. what we're trying to do is practice strategic deterence we're trying to convince kim jong un that if he attacks us, there's going to be an unacceptably strong response from the united states tillerson and mattis have been together in delivering that message. they've been very clear. the president has not. the president has muddied the waters >> mattis was just standing today at the dmz with the
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defense secretary from south korea. >> that's a very good message. >> that's not smart. you don't want to -- you don't want to raise the risk of a mistake here by kim jong un. >> while the world's attention is on the upcoming olympics, are you confident the chinese will have him under control and not use that as an opportunity to kind of saber rattle >> you know, he is -- kim jong un is unpredictable. i think we might see more in the way of ballistic missile tests the north korean foreign minister even said there might be a hydrogen atmospheric test, which we haven't had in decades in asia. i don't think he is done trying to stoke the fires kim jong un in north korea >> the mountain there is about to collapse. >> knee got all sorts of problems there i think eventually where kim
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jong un has to go is negotiations he can't win in a long-term battle with the united states, political battle not when there are so many sanctions impinging on his economy, and i think the best case for the president's trip to asia is that they announce some type of move towards negotiations the other thing i think to look for is this big u.s. opening to india. secretary tillerson has been in delhi this week. there was a big speech last week this continues with president obama and president bush and what they're doing, and that's to establish a relationship, a military relationship, with india that indicates that the chinese we've got a long-term competition with them for military power, and india and japan are very much on the side of the united states >> what are we employing to be watching on the news as the president is over there? how are we going to cover it here by our media, and how will it be covered over there do you think he goes to the dmz when he is over there? >> i don't think he will go to the dmz. i think it might be too provocative. given the fact that the president is not disciplined, and his advisors never know what
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he is going to say or not say. here's a situation where the risk of war, nuclear war, is certainly heighterned from where it was a yoer ago. it's not likely it's going to happen it's not probable. obviously he is going to have to make statements, and the big news is can the chinese and americans coaless? xi jing ping and donald trump so -- that's where the president trump administration wants to go >> pris previous trips have been covered positively, and at some point over here i think we had some members of the media with no choice but to cover it positively how is this going to be taken? >> i think the big question for journalists should be can president trump convince president xi jig ping to turn up the heat for sanctions, rhetorical heat on north korea on this trip because they've been working on this for ten months there's got to be a next step here where the chinese do more
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>> right >> it's a big deal when a president -- u.s. president says -- you saw what happened when the president visited saudi arabia they're still talking about how honored and how, you know, amazing it was >> very much so. we've got a difficult relationship with china because we're working with him on north korea, but we're competing in the south and east china seas for military power >> he can build rapport with people >> he has had a very uneven start as president on foreign and defense policy one of the other challenges is can we embrace and get closer to both japan and south korea prime minister abe and president trump have a good relationship >> that's what i thought >> they're with -- i don't know.
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>> look at netanyahu it's a better relationship than we had in at least -- >> president trump has had some tough things said publicly about the south koreans. even ended to end our free trade agreement, which doesn't make sense in the middle of a north korean crisis. >> thank you >> thank you >> coming up, a blockbuster deal in the works reports at cvs health is going to make a bid for aetna. that's straight ahead. here's a look at european markets at this hour green across the board "squawk box" will be right back. building a website in under an hour is easy with gocentral...
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good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center, i'm -- this is good. first look >> an annual rate of 2.7%. that's slower than the second quarter's 3.1% it will contain some impact from the hurricanes that occurred in august and september drugmaker -- it's almost like we can -- if i were the government, i would do a kitchen sink like the ceo does do a kitchen sink quarter.
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if there's anything weak, throw it in -- >> the timing on this a little bit. shipments were going to hold off on that. >> oh, wait. i know why that's up there look at your next story. >> i will, but i have to do this first. okay >> exonnon mobile and chevron report the quarterly numbers next hour. here we are. the maker of ugg boots found no takers when it put itself up for sale deckers outdoor -- oh, boy it reached out to 90 potential buyers, but it was unable to
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strike a deal. >> 90. >> i can't believe this. 90 different -- i guess -- >> private equity. it says it will now focus on improved performance and increasing returns for its shareholders >> never mind. we'll do it ourselves. we are in the thick of earnings season, so let's get some investment thoughts and some market talk as well joining us right now is the director of global macroat fidelity investments also tom heyland who is global investment strategist at assent private capital. that's a part of -- >> joe terra nova, virtus investment partners and a cnbc analyst. we know we're getting the gdp number today, but the earnings we got last night were something to really watch. >> the estimates started on the low side the growth estimate going into earnings season about two weeks ago is only about three, but
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it's about plus five and then usually you get the upward drift as you tend to get them. about 300 basis points we're probably going to end up at around plus six, seven, eight, which actually is the long-term trend growth rate for earnings request. >> positive earnings growth and a dividend, even if multiples don't extend from here, which they're likely not going to do just considering what the fed is probably going to do going forward. >> tom, most of the nay sayers on the market, anybody who thinks that we have seen the highs comes in and says it's going to be much more difficult to beat expectations as we get into what is now the third quarter and then the fourth quarter. obviously they were wrong on the
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third quarter. yourian said numbers were brought down because people had concerns about what happened with the hurricanes. now we're looking at fourth quarter. what do you think about the potential for beating earnings expectations going into this -- the fourth quarter >> yeah. we saw the earnings beats by alphabet, amazon, microsoft. i think more interestingly, you have some of the news out of the multi-nationals like 3m and caterpillar, but they're saying that you are not really seeing revenue growth here, but they're seeing revenue growth in all regions around the world, and that kind of confirms the narrative around the economic base globally that's just in good shape, and you are seeing that in asia and europe and the united states. you know, that gives us confidence going into the fourth quarter that, yes, you know, multiples are high keep those multiples, you have to have earnings growth, and we saw this in the third quarter. we continue to have confidence in it the fourth quarter >> for either tom or urian, we mentioned at the top, it seems to be all about growth, and you are seeing synchronized global
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growth right now earnings growth was negative, skps we had desynchronized global economy where the u.s. was growing, but the rest of the world was not. when you increase the discount rate or the risk-free rate in that model and you don't have anything in the pneumonia raenu support it you have 2016, now 2017, it's the total opposite the fed can basically tighten, you know, as much as it wants almost because we're having 10% earnings growth and outside the u.s. it's double digit earnings growth, and the market is in a much better position to with
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stand that as we go into next year, if the fed does rachet up, you know, the fed funds rate more than the market maybe expected, we will need to have that ongoing earnings boost to kind of keep the markets in check >> tom, what do you think about that >> i think it depends on why interest rates go up are they going up because the growth in the united states is so strong but the fed is able to continue to raise interest rates? that's a good environment. it says that the economy is doing well in a corporate earnings continue to do well, or are rates going up because of, for example, deficit financing in the united states in terms of our budget deficit and so it's more than inflation worries. i think it's more key on why rates are going up than just a level of rates >> tom, want to thank you both for being here, and, of course, joe is with us for the rest of the show both joes. >> every day >> whchs the last time i haven't been here? >> when you wandered off to the bathroom >> receipts go to break. >> when we come back, we're
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going to be talking active ware -- talking about taking activewear to a new level. kate hudson shares the secret to her growing fabletics brand. right now, though, as we take a break, take a look at the u.s. equity futures they've been higher this morning. dow futures up by 47 the nasdaq up by 78. mo tditeupy incad b alsten we come into this world needing others. ♪ then we are told it's braver to go it alone. ♪ but there is another way to live. ♪ a way that sees the only path to fulfillment- is through others. ♪
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call, visit or go to >> reports this morning that cvs health could make a blockbuster bid for aetna. why they're looking to buy the nation's third largest health insurer. that's next. at the top of the hour, more on amazon's big earnings beat "se numbers pushing the stock "se numbers pushing the stock hierqua leader in optics,ght baw photonics and imaging. fueled by strong university partnerships, providing the world's best talent. and supported with workforce development to create even more opportunities. all across new york state, we're building the new new york. to grow your business with us in new york state, visit
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>> the futures this morning have been indicated higher. this comes after a down day for the nasdaq yesterday s&p 500 and the dow both finished higher. then we got those really strong earnings last night from a lot of tech components, and the nasdaq looks like it will open up by 81 points. dow up by 47 the s&p up by almost ten >> cvs health is potentially buying aetna in a deal reportedly valued at over $66 billion. it would be a transformative deal bringing together different health care verticals. payers, providers, benefit managers, and even retail joining us now for more on the deal dynamics is frank morgan, managing director rvc capital
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markets. >> is this one that makes sense in your view, frank? >> i think it's a reflection of what's going on in the overall health care market obviously we're very concerned about health care inflation in america. there are two major themes here at work that we think are causing this vertical integration again. certainly the mood towards value-based purchasing and the mood towards consumerization, and value-based purchasing, what i mean is really aligning the incentive of the provider and the payer. i this i that's what's causing this integration and this vertical integration that you are starting to see with those payers and providers, pbm's on the retail side. this is not a new certainly idea united started this several years ago. they bought catamaran. as you mentioned earlier, last
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week there was an announcement where anthem bringing pbm services in house to cvs >> you are seeing a big surgery center company, and a lot of companies actually have provider capacity on the outpatient side whether it be surgery centers, urgent care centers, imageing, even clinics, physician clinics, and the likes. we think that's -- it gives them the ability to really drive down costs. once again, the cost issue in health care is what we're trying to address here. if you can keep people out of the in patient setting, provide these lower cost settings, you can lower costs. >> and this gives more scale because there are going to be cost pressures, and some of these companies have been doing pretty well. we've looked at the performance
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of some of the big health insurers everybody has been benefitting from, i think, some of the exorbitant rise in health care costs, right you can almost draw a line to some of the companies that have benefitted is that gravy train over and this is why this is happening now? >> yeah. i would say that, you know, managed care companies have benefitted from actually lowering health care costs if you look at what they've been able to do with medical cost trend, medical cost trend across the board has really been coming down for all the manage care payers for managed care perspectives, they're good at lowering cost trends when you think about this transaction, i think it will do it even more combining the health care benefit with that drug benefit there really are some savings that you can get when you coordinate those two benefits together aetna has said in their investor day in the given case studies where you combine the drug and the health benefit together, when you integrate those, you can significantly reduce medical cost trend >> hey, frank, it's joe. what type of probability would
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you assign on this deal actually getting done and what's the timeline >> you know, i don't know about the timeline obviously it hasn't been officially announced yet, but i would say if it actually happens, i think from a regulatory standpoint, probably more likely than what you saw from some of the managed care deals, obviously, none of those deals ended up running into serious fcc issues in this case the perspective, you probably get a good review, but i think it's probably a higher probability than what you saw when the mco deals >> are there any -- i mean, are you willing to point fingers at any of the bad actors? are any of these pbm's -- are they bad actors in your view at times, frank, where they need to be reigned in, maybe margins are too fat at some of these places? are they doing what's in the best interest of some of the consumers and the overall health care system in this country? >> i think they have served a useful role in the past. essential over the history of the pbm history, you have seen a dramatic reduction in health care inflation really until the
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last few years certainly that's now changed with the introduction of specialty drugs. yeah, i think they served a very good purpose at one point. i don't know that the pbm model is a stand-alone business model really that will be around in the future once again, i think the better model that will drive costs lower from here is the integrated model >> amazon, you know, in the back of everyone's mind on this too well, will they ten years from now will we be saying amazon and everybody else falls by the wayside like, you know, a big -- like a black hole? >> you know, i would say probably not i mean, one of the reasons when you think about this transaction, there is some high value add to having really both the health care benefit and the drug benefit together, so i don't know that amazon ever wants to really get into the full -- into the managed care industry, but i would say you will probably see a highly consolidated combined industry here, and i think amazon will be amaz amazon and the managed care industry will be the managed care industry. >> frank, thank you.
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we appreciate it a lot of nuance to this story. you think it's going to happen you think it's 80% that it does? 60%? >> i don't know if i put a percentage rate, but i would say it's probably got a decent chance >> all right, thanks when we come back, kate hudson shares her credit to entrepreneur success we caught up with her at the fast company innovation festival yesterday. that interview is next check out the futures once again. nasdaq futures indicated up by 83 the dow up by 46 the s&p up by ten. strong earnings really pushing quk x"ilbeigg.rnin "sawbo wl rht back. ah, dinner.
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find your awesome with xfinity xfi and change the way you wifi. >> we've been telling you about our exclusive interview with actress and entrepreneur kate hudson we sat down with her at the fast company innovation festival. she spoke on a panel with wal-mart's e-commerce ceo and founder mark lori about e-mail disruption and how her company is using data to try to win over customers. >> what we did with fabletics is create a new type of model >> you're the name you're the face. you're in the commercials. you're really hands on on everything that's happening. >> pretty much i'm always involved in the design just because i love it. this is one of the things that we actually talked today with the fast company about what is the benefit of being a digitally native company one of the benefits of that is
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having the technology to have the data to create a more seamless operation we're able to have such direct line of communication with our customer then as you expand, you realize that when you are going into retail spaces, you can strategy e -- strategically place them -- just because retail is hurting right now. >> it's very tough times >> well, brands that are digitally native, and we're finding we're having a lot of success in retail. it's because we have the data to know how to create the retail experience our loyal customer, if there's a omni presence or omni channel find that you have a two to three times more valuable customer because they can see it, they can feel it, and you make the experience so seamless for them >> you mention that you learned along the way. >> learning.
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>> look, there's got to be things that you stumble on and lessons that you took out of that >> a million >> i came in to a relationship with partners, investors, and customers kpleelts licompletely novice my brain works in a way that understands how to connect to people and what people want. >> is there any way that you turn to for advice, any friends or family members? >> jessica and i actually -- it's really funny because we both had success in brands really fast and have this big learning curve >> jessica alba? >> yeah. so it's nice to be able to talk to someone who is sort of understanding the ins and outs of being a part of a company that has grown kurt is someone that i like to go to to talk about a lot of different things when it comes to business. >> i saw something that he recently talked about in an interview where they asked him what he was proud about with
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you. he ran the gambit. he also loved what you are doing with this company. on your own list of accomplishments. what you have done how does it kind of rate >> i think it's pretty up there. when i connect with the people that it's impacting, for some reason it's always on an airplane i'm always on an airplane, and someone comes up to me and starts talking about how actually the company and the community has impacted them. if there's anything to be the most proud of inside of the work that i have done in my life, it's building a community for women to feel supported and to go to back to my dad, i was a very tough little girl you know, i was -- i had three brothers kurt always said he had very high expectations of me, but the truth is that those expectations that he had somehow drove me i think to be a very ambitious person it's not necessarily about financial success as much as it is about finishing something i feel like until the day you
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die, you always want to make your parents proud no matter where they are, right? >> again, that brand has $250 million in revenue they have built it in just four years time we're going to have more from our interview with kate hudson coming up, including what she had to say about harvey weinstein. >> look at this. i'm really going to nail this. coming up, big beat. buy big tech there's a lot of b's it's got wall street buzzing this morning we're going to play some bg's and run through the numbers and talk tech after the break. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities.
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>> u.s. futures pointing to another positive open as some big tech names beat the street deal news. cvs reportedly making a more than $66 billion bid for aetna plus, breaking economic data first read on third quarter gdp. now just 30 minutes away as the final hour of "squawk box" begins reason. ♪ i'm on top of the world ♪ i'm on top of the world >> live from the most powerful city in the world, new york.
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this is "squawk box. ♪ >> good morning, and welcome back to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm joe kernan along with becky quick. our guest host this morning is halftime report trader joe terra nova we'll have more from him in just a bit. good day for you to be here, joe. a lot of -- >> always a good day to be here. >> tech and -- >> got lot of stocks today, too. >> exxon any minute. >> let's get a check on the markets. futures are strong, and it's based on some of the results that we have seen. not as strong as they were, but you can see from the nasdaq technology results are strong. it's different than we've seen in the last few sessions it's been the dow and, nasdaq has been lagging it's reversed in this session. let's look at treasury yields. maybe the one story we haven't really talked about as much. we'll see whether it turns out that this is the -- this is it
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this is where he get through two and a half, and someday get back to, i don't know, can the world exist at 3%? i don't know i don't know whether everything just stops or not. the globe might come to a grinding halt. anyway, is observationon -- >> exxonmobil is out the dow component earning 93 cents a share. street was looking for 86 cents a share. looks like revenue came in at 17 billion they are talking about the u.s. downstream having a net of $391 million. u.s. upstream loss $238 million third quarter operating cash flow $7.5 billion. remember, crude oil prices yesterday, you can see right now exxonmobil is trading up it's up by 39 cents. crude oil yesterday closed at a seven-month high, and that's probably a huge driver too >> this is consistent with what we saw with totale better earnings. revenue is much better here. 64.6 billion is what the street expected there's a 4 cent impact here related to harvey, but, you know, oil at $52 gives time for
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recovery for these energy names, and the important thing now is you are seeing two consecutive years where cap x has contracted for a decade energy was it is largest sector by cap x in the s&p 500, right we're buying time. we're cutting costs. we're protecting dividends oil prices are recovering. i'll tell you what, in 2018 if you can actually get cap x even modestly, 3%, 5% higher in the energy space, that's positive for the s&p. >> we'll continue to watch that. again, exxon shares are up on this news. in the meantime, a blockbuster deal could be in the works cvs health reportedly is in talks to acquire aetna for more than $200 a share. health care analysts anna gupta joined us earlier this morning
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>> gain have almost 1% aetna shares up by just over $2.43. again, the reports suggest over $200 a share you can see the aetna shares are only at 181 right now. probably a lot of speculation and questions surrounding this right now. >> mobile ad revenue for a big driver add 34 points on to that one
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>> it's faebl breaking out for a long range it's even longer if we go back further on that chart. how do you get 85 points on the nasdaq add in amazon. shares are soaring after the company recorded a big earnings beat up $75 $75. that's almost an 8% gain michael olson, a senior research analyst at piper, what was your old price target, michael, and have you done anything with it today? >> actually, we stuck with our price targets. our target was 1,200, and we
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didn't raise it today, but a lot of good things going with amazon they beat out essentially all fronts on retail, aws, and even the other segment, which people forget about, but the other segment is growing it's got a huge high margin advertising business within that as well. >> so you never waiver it went back below you know, it went a little bit below 1,000. you know, you hear about is it ever going to get -- are there regulatory implications as far as being too big, is it in too many places, is it doing too many things, are there low margin businesses it's getting into that you are worried about? none of those things caused you to waiver from 1,200, so that's pretty good for you. >> yeah. we stuck with it, and they are getting into new areas they're growing their addressable market by just adding new verticals whole foods is obviously a huge piece of that. on the margin front, you know, the margins were good. the guidance for the margins in particular the high endof the range is in line with consensus which typically they beat the high end of the range on average over the
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last seven quarters. they've beaten the high end of their guidance range by .2%. if they do that, then they'll end up beating where the street was going into it for a q4 margin >> the amount of heft and disruption is beyond belief, because all you have to do is go back to what happened in kroger or with whole foods. meg terrell is here now. aetna and, you know, now looking at pharmacy benefits because with cvs looking at aetna, a lot of it has to do with am azblon and -- i hope besos agood guy deep down. >> he is he is. >> i hope so because he is going to be, you know -- he is going to be one of the most powerful people on the planet he probably already is, right? >> he is a good guy. do we have to worry? >> i'm sure he is a great guy. he is definitely one of the most powerful on the planet
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as far as getting into some of these other areas, you know, we'll see on the pharmacy side there's a lot of regulation there. a lot of red tape. you know, he will give you an example there. they're in the business of shipping wine across state lines right now, and they're looking at getting out of that because they think that has too much regulation i'm not 100% convinced they're going to be getting into the pharmacy space, but we'll see. >> so, michael, amazon obviously steps in they bet into the supermarket space with the purchase of whole foods over the course of the weekend they basically did what whole foods could not do in ten years, which is cut pricing. now you are looking at a business that's going to be profitable now they endeavor potentially into health care do you view this entree into that sector as something where they'll utilize m&a to acquire their way in, or they'll try and organically grow into the industry >> yeah. you know, on the whole foods side, just on that quickly, the thing that amazon always has going for it is that they've got other areas of the business like
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aws and like this other segment revenue that's higher margin that they can, you know, basically pull from as far as taking profits and funneling it into other new growth categories that's certainly a positive for them and a negative for any competitors in the space as far as on the pharmaceutical side, like i said, we'll have to see if this is an area that they really want to get into. again, a lot of regulation there. if they do want to get into it, i don't think there's any reason why they can't build it versus buy it that just comes down to the age old, you know, rule of do you want to get in fast or do you like to build and move a little slower >> you know, i mean, there are half a million -- more than half a million employees now, and i don't know they added a quarter -- >> they added a ton. >> they added quarter of a million in the last year or so i guess they're going to ep the new headquarters do you know where it's going to be yet that's like a sweepstakes, isn't it what's your -- do you have a
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guess? geographic >> we really don't we don't i saw you could bet on-line. there's sites you can wager on and it looks like the odds are for atlanta at this point. that's certainly not our bet in a sense, we don't know. that's what the market seems to think right now. >> smart close to sea island. you know what i mean >> opposite coast. >> that's a good move. yep. that's -- a million employees within, what, two years? >> yeah. i mean, it's -- they're on the move quick, and obviously, adding whole foods created a significant uplift this quarter as far as the employee growth, but they've talked about adding, you know, more than 100,000 additional employees in the u.s. over the next few years, so there's a lot of employee growth still coming especially if they continue to move into new verticals to attack these new addressable markets. >> he is going -- >> use them until they have
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their own. >> he is going to make, like, bill gates and -- he is going to leave these guys this is amazing. it's irritating because he is so young. >> the rate at which they're employing people is fascinating. it the question is are they on their way to employing as many people as wal-mart does? >> they should blow right by wal-mart, right? you would think. anyway, michael. >> it's kind of like old tech you think of with wal-mart we appreciate it >> thank you >> good job with your -- let us know if you are going to 1,250 or 1,300, will you >> will do >> see you later the earnings coming in fast and you are foous this morning among the names of note, we have merck. meg terrell has been following the company for us, and merck have been trading higher when the news first hit, but now it's down about 2%. >> it's a pattern we've been seeing among a lot of health care earnings this season. sort of an initial little pop on the results. sort of an earnings beat
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people digesting the numbers, and not liking them quite as much as they had been seeing the biotech earnings season has been terrible so far. we saw celgene down after taking back the to 20 guidance. for merck it was a mixed quarter. they did have a bead on aus judged perngz. a revenue was a slight miss. they did raise their full year 2017 earnings guidance and narrow their revenue range for the year interestingly, merck is detailing the result of that cyber attack that we saw in june saying that there will be an impact of $135 million there was an impact in the third quarter from that cyber attack production was stopped for a while, and it's interesting to see that impact. they also, of course, had that big cancer drug. sales of that drug almost tripling in the third quarter over the previous year's third quarter to more than $1 billion. coming in basically in line with estimates. some analysts saying it's light. hepatitis c franchise coming in a little light for the quarter they're saying they're expecting increased competition there, which is something we've been hearing from gillead
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a lot of drugs coming on the market and bringing prices down in this space. that's been interesting to watch. >> speaking of prices, we've talked a little bit this morning about what the president has said about drug prices >> yeah. >> potential pressure that that could put on the big pharmaceutical companies >> merck in particular merck got targetedafter ken frazier stepped down from the council prompting the president to come out and say they have rip off drug prices. the president has talked about drug prices, but he hasn't done anything that led to a rally in biotech stocks they're having a tougher time right now, and tougher earnings season we'll have to see if anything happens. democrats in congress are trying to give medicare the power to negotiate, but that hasn't been something that republicans have wanted to do >> meg, thank you. coming up, a big issue for small business a special report on how some cities are tackling the issue of paid family leave. first, though, as we head to break, check out the shares of exxon right now. up almost a percent. the oil giant posting better than expected results. stay tuned you're watching "squawk box"
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with joe yeah, he is here on cnbc. is and meg terrell she's here he-man, you interfering imbecile! give us one good reason we shouldn't vanquish you to another dimension! ok, guys, hear me out. switching to geico could save you... hundreds on car insurance. huh, he does make a point... i do like to save money... catch you on the flip, suckas! geico. because saving fifteen percent or more on car insurance is always a great answer.
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>> we've been watching the futures, and they have been higher all morning long.
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whoa what just happened futures are -- they cut some of their gains at least for the dow. the dow components, exxonmobil was high are merck lower. maybe that's part of it. s&p 500 is looking like it would open up by 8.5 points. the nasdaq is still indicated up by over 85 points. that's in large reason because of the technology earnings that we got last night. >> much like the minimum wage paid family leave it is a hot topic on main street new york state is set to implement a sweeping paid family leave law phased in over several years, and kate rogers is here to explain exactly what this means for the state's small business owners and their employees. hi, kate >> hi, joe good morning to you.
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well, it means more work for some small businesses, and more flexibility for employees. now,ing a brooklyn-based uncommon goods workers bringing home a new child or facing challenges in caring for a sick loved one don't have to make tough decisions about choosing work over family the company has a paid leave policy in place gaern teeing primary care givers eight weeks off. >> providing our workers with an opportunity to balance their personal needs and work requirements is something that we think is in our business interest as well >> plans similar to what uncommon goods is offering will be statewide in the near future because on january 1st all new york state businesses, no matter how small, will be required to provide what's being hailed as one of the most progressive paid leave policies in the nation the program is phased in over time, and it allows up to 12 weeks of paid time off for a new child, including adopted or foster children, as well as ill family members critics say the law places an unfair burden on smaller employers in new york.
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>> it is the most expensive and expansive such program in the united states. administratively it's going to be very challenging for them, and especially for smaller companies, if it's a key person or very important member of the staff, they're required to permit them to take this leave >> the nation's smallest employers with 50 or fewer workers are exempt from the federal family and medical leave act. for example, which guarantees unpaid leave to workers. new york's law is much more inclusive than what we currently have at the federal level for workers at companies of all sizes. >> all right it is -- you hear a lot about it you have a lot of proponents, and other people -- >> something ivanka has been pushing for obviously at the federal level. we'll see what happens there too. >> thank you >> thank you >> when we come back, kate hudson speaking out on -- >> the other kate. >> -- hollywood -- the other kate kate hudson. >> exactly >> speaking out on some of hollywood's biggest issues, things that have been happening
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points right now the s&p indicated up eight >> more women are coming forward with stories of harassment and sexual misconduct in the media, technology, and in the movies. after the harvey weinstein scandal. we spoke to actress turned entrepreneur kate hudson about the changing culture that we've seen in hollywood. >> i personally am so grateful for a lot of my friends who have come forward because i think that that really makes other women feel that their voice will be heard there's harvey, and then there's so many men over many different fields women need to feel that they can come out and talk about things that are inappropriate we've long been kind of sushed the fear with coming forward
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with something like that is enormous for a woman because it could mean their career. it could mean everything that they've ever worked hard for harvey is not the only one, unfortunately, and it's just created a climate for i think real change. >> and that's her bottom line. she does think that this is a turning point, joe, and that this will mean a brand new culture going from here. >> it can happen to men too, and
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we have seen that too. i saw kevin sorbo and someone else mention it too. >> in corporate news expedia is falling short of estimates on the top and bottom lines. among the factors weighing on expedia's performance, hurricanes as well as weaker than expected quarter for a majority owned trevago huntsman and swiss chemical maker clarion have -- this follows opposition from activist investors who maintain that the combination of the two chemical companies would hurt shareholder value. western digital forecast current quarter revenue below analyst estimates, but the hard disk drive maker did beat estimates on both the top and bottom lines. for its latest quarter on strong memory chip demand and higher prices our guest host this morning is
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joe terra nova it's okay to see this rotation, i guess, isn't it? the dow was leading for a while. now you got nasdaq seemed like people worried that maybe the nasdaq had gone too far. maybe the fangs had gone too far. now everything seems to end up at higher levels, though, as we move ahead >> so the interesting thing is when you go out and i do a lot of conferences i talk to morgan stanley i'm talking to wells fargo we use this word diversification all the time right? what is diversification really meaning? diversification 2008 when the world has a global margin call really didn't matter right now exactly what you're highlighting, your best defense mechanism when this, you know, ultimately this 5% correction is going to come. who knows when it's coming your best defense mechanism is diversificati diversification. to be in whether it's all asset classes or all sectors >> you think people think bonds, and bonds has been a lousy place to be. >> bonds have been a fantastic place to be over the last couple of years >> you're talking corporate bonds.
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>> high yield. that's where most investors -- >> i'm talking treasuries. >> most investors are in high yields they're in munis that's been the right place to be the only thing down year-to-date are mlp's. we're not giving enough credit to the recovery in europe. how about japanese equities. how about emerging market equities listen, it sounds kind of corny to use the word diversification, but where markets are right now, that's your best defense mechanism. >> it's in a couple of -- a couple of well known investment types say next ten years, 3%, 4% >> i don't know what's going it happen in the next ten minutes you know, and what's amazing to me -- >> we're going to go to break, and before that -- before -- in like a minute and a half we'rin actually going to break. the next ten minutes we're coming back at 8:30 with more unbelievable guests and analysis and things that's the next.
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do you think it's absolutely because we've come so far that we regress or revert to the mean over the next ten years and we're only going to get four no one knows that, right these are guys that have been sort of negative up to this point too. >> i have been here 90 minutes we haven't even spoke about apple yet, and we're used to everything was about apple good things going on there as well too >> you're right. >> we got to go. >> when we come back, we've got the most important economic data release of the week. first quarter -- first read on wel rhtarr p. 'lbeig back. and high-dividend strategies. sure, these are investments. but they're not what people really invest in. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they want out of life, and maybe even more.
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welcome back to "squawk box. rick santelli here live on the floor of the cme waiting for our third quarter gme. it has a 3%. that's the number. we're expecting somewhere between 2.5% and 3%. our last look for the previous quarter, our final look, third time around the block, was 3.1 pretty even there to 3%. not bad. i'm sure the administration is going to be very pleased about this it's always hard to tell and connect the dots exactly who is responsible, but certainly it seems as though we haven't overburned markets with more regulation or higher taxes those are the topics of the day.
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another topic of the day, dollar index shot through 94 yesterday. basically it's a penny higher. we're still flirting with light closes above 2.44 and change where we saw it in 2016, and the spread between -- it's now the widest since april around 205 basis points. that correlation is something to pay attention to becky, back to you >> thank you very much let's bring in steve liesman he has his take on the data right now. what do you think, steve >> first of all, i saw this gdp report as like a free play like the defense went off sides and the quarterback got to do whatever he wanted to do because it didn't matter >> right >> if he threw a touchdown >> but >> this is sort of a touchdown in a couple of weeks, i don't know if you remember, but i've been talking all quarter long about how remarkable it's been that i have been incapable of really seeing the hurricane impacts in the data. we had a brief period where people brought their forecast down into the 1% range that kind of went away as the
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data came in and now what's happening is you actually had a slowing of the consumer from 33 down to 24, and it's the business investment that also slowed, but it's doing good enough along with equipment spending up at 8.6%, and i haven't looked at the inventory number yet, but -- or the net trade number the federal government is spending a bit more than they were spending previously, believe it or not. >> so it's 3%. >> it's -- off of 3.1. >> 3.1 and then -- okay. we've heard -- the president likes to say i got us back to 3% quicker than anyone said, but he is talking about one quarter, and everybody immediately points out that obama had more than a few 3% quarters. did obama ever have back to back 3% >> i don't know. i'll look at that -- >> you don't know that >> okay. now we do have a back to back 3% this is going to be -- >> i think there were back to back -- >> it's going to be big trouble for you if he gets a third and a fourth if it goes -- >> why for me? as if i don't want stronger economic growth?
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>> yeah, that's why. because you said 3% is not possible >> so we're going to spend time with you impuding what i hope for and wish i have been on the show before, and i hope for more jobs can -- >> there were several. >> in 2014 q3 >> there was a couple of back to backs. when is the last time they were three in a row that's the one that -- >> i don't have that much data >> do you think it's going to happen in the fourth quarter >> i think we have a lot of momentum here, and the interesting thing about this gdp is i think we actually do see the hurricane in this gdp. >> where do you see it >> i think the consumption would have been stronger if there weren't for the hurricanes >> people couldn't buy stuff they -- and the buying that happened was it in time to get into the quarter >> yeah. >> i think what's different in 2014, you did not have global growth it wasn't synchronized
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>> that's a great point. >> i think he has some information on the questions we were asking too. rick >> yeah. yeah third quarter of 13, fourth quarter of 13, they were 3 had the 1 and 4.0 respectively then in mid 2014 second and third quarter, he had a 4.6 and a 5.2 back to back that 5.2 was his high water mark there were some good quarters. the reason i remember is because i was always a bit disappointed that the federal reserve didn't take more of a chance during those growth spurts to maybe do some tweaking earlier in the cycle. those were the high water marks in the back to backs >> okay. thanks, rick constance back to what you were saying you think that we really have some momentum going and that this is going to happen in the fourth quarter too >> i do. i think that -- and as joe said, we have global growth, which gives us a nice tail wind. we have the whole global economy expanding for the first time since before the crisis.
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we have -- before the last jobs print, we had over 85 consecutive months of job growth that momentum is so significant. if you look at the past two longest recoveries, we are -- there are two ahead of this one. that impacts consumer psychology, actual wall lets it makes a difference. >> how much does it matter that inventories have added .7% to gdp? there has been some inventory build, and we did have a big inventory on the first quarter >> people would build inventories ahead of the holiday season some of the inventorienventorie
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dig down into them and we see if those are autos, they'll be withdrawn, right, because people are going to be replacing automobiles as a result of the floods i think it just -- i think we'll have to wait and see >> i want to make one more point which is you have had a great show talking about these unbelievable earnings, and it's been a theme out there that is not disconnected from this report, right >> not at all. >> we're talking about the pie being bigger, which means there's more for the corporations to take in the slice, which is their profits. we've seen that. there's a direct line from the better corporate policy we're seeing to the better gdp >> these earnings are based on higher revenue higher sales it's not on margin >> you are getting the higher revenues and the higher profits, which we've only really done one before >> that's a reflection of a better economy >> you are seeing inflation pick up in a good way it's demand pull inflation >> that's what this report does. it obviously allows the federal reserve next week when they meet
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to look at september's inflation and say, no, that was just a one-off. that's not indicative of -- >> steve, you have already baked into december as a rate hike >> what's interesting here we're now in an interesting time because they've begun to bake in another one in june. that is now over 50% let's remember the median fit forecast calls for three next year the market is roughly a rate hike behind where the fed is, and the question is whether or not the market having been right about the fed, what the fed would do for a very long time, and the fed having been wrong. if that now reverses itself. if the fed is in the lead here, and the idea is that maybe the market ought to be expecting a little bit more in the way of rate hikes by the way, it's all not a lot, but the question becomes do we do another 75 basis points >> i think the other thing in addition to the rate hike pace is where do we end up? the market has been below the fed for a while.
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is it about 2%, 2.25%. the fed is still at 75 where do they end the rate hiking cycle >> that's something that animates the stock market that's not well appreciated the 2.75 end point here is the bottom of other cycles when the fed cut, it would cut down 2.25, 3 that was seen as ridiculously low. now we're talking about after a fashion here, 2019, 2020 and the fed getting up to 3% and that's it what we're looking at -- what we appear to be looking at and if there's a fatal mistake out there in people's thinking, the idea is there is a permanently low cost of money out there that you can then price stocks against.
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>> coming up, cyber security software company forescout technical flolg is going public today, but before this the ceo will sign his name on the nasdaq board. he will join us right here on "squawk box. i think i saw crepes >> breakfast >> maybe some crepes over er we like this guy anyway, we'll be right back. your brain is an amazing thing.
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what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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>> this morning you can see the nasdaq is the one that's outperforming and outproducing based on all those very stropg technology earnings that we got from the likes of microsoft, intel, alphabet, all the way through amazon really impressive. that is boosting the nasdaq this morning up almost triple digits. a gain of 94 points. s&p futures are hanging in there too. up nine points the dow is up. >> revenue beating the forecast in the consumer products maker -- it looks like that stock is down be half a percent. >> forescout said to be trading on the nasdaq today. the internet of things network security provider is offering
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5.3 million shares at $22 a share in its ipo joining us now michael, he is ceo of forescout technologies. that's the guy that is out in front of the rest of the troops looking for -- it's a scout. what we think of, i guess. that's the one checking out the landscape to see what's coming it's a good name for what your company does i would manual >> it is, indeed >> can you pretend you're explaining it to someone who looks much younger than i do >> sure. >> how does it work?
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>> i mean, it's been really horrific watching some of the seeber attacks how they've ramped up not only in their ferocity, but in the actual number of them that are getting through. we have a warning that just came from the government last week talking about how foreign entities are targeting our industries and our power companies. merck is talking about how it got shut down by a cyber attack. >> i think the reality over the last bunch of years is we have brought so many more devices on-line. >> we never thought much about our security cameras until -- then all of a sudden we realized they were strung together doing something more sinister. having that visibility,
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understanding what is on a network, let's companies be much more educated in where they point their investments. >> who do you need to take market share from? >> what's so unique about the intellectual proper of the company is we're agentless we don't require software to be on every device, and there isn't anybody in the market that does it the way that we do it our traditional competitors are the larger networking companies, but what really differ enshats us and separates us is we work with all of them we work with cisco and juniper and amazon and microsoft and all the players and let an organization consolidate that across all those vektors >> we always ask the question, and we kind of joke about it after social media, what is it usually we get internet of things iot. you are sort of ahead of what is going to be an emerging sort of dominant part of our lives, i guess, at this point i guess i don't want anyone hacking my pacemaker or something, right
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we're going to be connected to everything, right? diabetics are going to know what's happening you are going to know everything about your home -- what's going on at your house you will be totally wired in got to have security that's the market? >> all aspects of our lives are being brought on-line. like you mentioned, i mean, we've moved from laptops to things like pace makers and cars these use cases that are somewhat more substantially connected, and simply having an understanding of what that is and being able to point your security investments based on that is a big thing. >> if there's 28 billion devices we'll be connected by 2020 you'll connect them on and protect them all what would your market cap be if you don't get all of them? >> the beauty for us with our clients is they look for one technology that goes across what was their corporate i.t. and then through all these other use cases. you know, banks put atm's on-line. we talk to hospitals, and it's beds, machines that are on the hospital floor that might be operated on you. it's the airlines. r and the gates. all of those things are on-line,
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and that's the market that we help customers serve >> block chain won't disrupt you, will it >> we can have almost any number of kwgss about new vectors that will bring billions of devices on-line, and as those devices come on-line, we have to make sure that we keep them secure. >> thank you good luck. >> what's the value of the company ipo? >> we priced the stock at $22. we begin trading this morning, and we see -- >> 22. what's it valued at? >> just about a billion dollars. we'll see what happens symbol big day -- >> it's a big day. >> and only lets >> and only lets >> and not crepes.
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>> no crepes >> you have to make a choice better than just the continental thing than some of the ipo's am i right, joe? >> you are -- >> it's just an ipo that has a continental -- >> we need an onlilet bar. >> it's amazing how accurate and correct you are. >> that's what i mean. >> protein all the way >> thanks. >> thank you, michael. when we come back, jim cramer will join us live from the new york stock exchange. in the meantime, take a look at the futures. again, it's been the nasdaq leading the way this morning up by triple digits. gain of 100 points on the open if we stay at these levels stick around we'lbeig bk.l rhtac
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>> she used strong adjectives and ad verbs she's not given p to those that was an extraordinary call 100 billion. 60 billion overseas. . >> to your point, i get an e-mail -- >> he had to get his head out of the darn mall. >> isn't that indicative of the environment we're in overall, everyone is so darn skeptical in
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looking for the reason for the market to correct? >> you're absolutely right, i've been concentrating whether jc penny can pay the preferred. instead he's got to buy sears, i don't know you're absolutely right, people sit there and try to come up with something negative, the keytruda call, the analysts are trying to get brian a hard time. meanwhile this is intel's moment so we can stipulate that alphabet destroyed the mall but can we at least stop going there. j. krer j.c pen knee, a lot work there but -- >> regain the luster of the late 90s and now microsoft did and it's like 90 intel is the last one, isn't it? >> well, they lost their way
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with ceos. brian has come in and buys mobile eye and much more artificial intelligence and he's a little -- like two years behind where sach is i hope he doesn't start wearing the t-shirt. >> you know what's not back either, cisco. remember 600 billion >> cisco was mentioned polyl poo a couple of calls. they are not come back to that level. he's a big falcons fan and that's a set back. >> a big setback this year. >> what about exxon and chevron? what did you think of those this morning. >> giants and browns all right. they are not coming out. they are not coming out. there's nothing there. >> do you see the baseball is back now, jim. tonight is the game. but in l.a. all of the stars were at the baseball games it's been a while and feels
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good, doesn't it. >> i can't wait. it's 8:25 tonight i think? >> i think the actual first pitch probably which is in -- >> only people who liked last night's game were people who played the ravens in fantasy and the rest of the country could care less. >> why they may get rid of some of those games, maybe. >> i wish they would would improve the quality. >> saturate it two joes, let's meet at the short hills mall and go hit macy's this weekend and jack up the numbers at nordstrom by buying a tie >> i think i'll stay home and shop on amazon >> now you're talking. let's create a new holiday amazon prime was better than the second greatest holiday of the year. >> and i get to watch tv on amazon prime, the only time i really use it. >> i agree, love you guys, thank you. >> see you in a couple of
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minutes. later on "squawk on the street." don't miss the cfo of intel live, we'll be right back.
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>> third quarter earnings seasons tend to be good for stocks with the dow and s&p gaining well over 2% a month after the start of the season. >> the most expensive rolex ever
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was sold at auction for $17.8 million. it used to belong to paul newman and it was here on set and we saw it earlier this week they set a new world record for a wrist watch that was sold at auction. he was -- >> that is ridiculous. >> i like steve mcqueen's leather jacket or something. >> or $17 million for a watch. >> you can't put a price on time, you know. >> you know -- >> very clever. >> you can buy paul newman's spaghetti sauce or popcorn or salad dressing i think half of the fun is in those that did go back to charity. >> i don't know if it's half maybe it did. >> maybe more than that. it's been great having you here this morning one message you would leave as we go into the weekend, last trading day of the week? >> i would say focus on the opportunities that are going to come forth in november keep in mind that buybacks for
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the first half of 2017 are down 15% relative to the first half of the 2016. but yet authorizations are up 18%. you have all of the ccar dividends and buybacks, i expect november to be a strong buyback month. >> it's been a pleasure. >> you've been to fars are y paris -- going back to the farm. >> still going to do halftime report >> love being here. >> "squawk on the street" is next ♪ >> good friday morning, welcome to "qua"squawk on the street. the nasdaq will be a big star after a big night for big tech amazon


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