tv Squawk Alley CNBC October 30, 2017 11:00am-12:00pm EDT
1%, half a percent at this point. a number of these tech stocks hitting fresh all-time highs, including amazon, apple, facebook, nvidia and mastercard just to name a few s&p is the best sector this month and this year. that does it for "squawk on the street." let's send it downtown for the start of "squawk alley." back to you. >> thanks very much for that it is 8:00 a.m. at facebook headquarters in menlo park, california, 11:00 a.m. on wall street, and "squawk alley" shrive live ♪ ♪
good monday morning, welcome to "squawk alley. i'm carl quintanilla with michelle caruso-cabrera and john fortt. our sara eisen is off today. joining us this morning, recode executive editor kara recode a lot to get to from tech. the big four testifying about their roles in the 2016 presidential election and russian manipulation, also reports russian-backed facebook accounts not only posted ads before and after the election, but organized events around polarizing issues. the f.t. points out for all the attention on the social media giants, it may only be a matter of time before d.c. regulators set their sights on amazon kara, it's a little weird saying big tech's under fire after a couple of sessions in which their earnings truly impress the market >> yep, that's why they are under fire, because they are big and they are tech and easy ma
n nipulated. in commerce, digital, and everything else. i don't think it's a surprise they are being targeted, because they are some of the most powerful companies in the world right now. >> do you see them coming to the hill with proposed solutions in hand >> i do. i think there's going to be some announcements. that's what i've heard from sources. also remember facebook announces its earnings on the same day, on wednesday. i think there's another hearing on tuesday, but i think the main hearing is on wednesday and exactly the same time the social network giant announces earnings i suspect there will be some news at both places where they are going to talk about how they are going to fix this problem. all of them have got to come up with solutions or look like they are fast forward or moving and dealing with it, because we've got elections coming up in 2016, 2020, and around the world it's not just here these companies have impact, it's all over the world they've got to really start to get a handle around how to
handle these problems. >> kara, if this matters to the investing case for these companies, and i'm not sure how much it does matter, then it should also matter that apple doesn't seem to be wrapped up in this at all. they have an entirely different business model apple stock hit an intraday high today, perhaps on the strength of iphone x orders and the reviews starting to trickle out. what's your take on how this does or doesn't affect capital >> you know, i agree also microsoft, same situation they are not strong in these businesses and apple -- >> microsoft, yeah >> they've got bing, but it's not been a player in this issue. but i do think, i've talked to people at both companies, they still -- they call it a viral contagion that they are tech, so it doesn't help them at all necessarily this is happening, although they are not getting dragged into these issues. but that's not to say if there's an encryption issue you can see apple getting pulled in.
there's all kinds of things these companies -- big functions in our society, so they are always going to be pulled into these issues as we move forward. >> yeah, i would think things like data gathering, for example. >> yeah. >> kara, so they are going to bring some solutions we imagine that's to forestall what would have been regulation. who knows if that's going to work but ultimately, have you thought about what regulation could come in and whether or not it would actually hurt their earnings when you look at the dollar figure that was allegedly spent during the campaign, they weren't huge numbers would it actually constrict their revenue that much? >> no, it's that we know of, you know what i mean i think one of the problems is, it's hard to track these things because of the billions of dollars and transactions that are going on i do think it's not a big number figure, but per acceceptionwises hasn't been good for anybody
i suspect there will be some regulatory activity, but congress can't do anything, it seems, so it requires a lot of activity on the part of legislators and regulators i think probably will have to agree to some things and probably won't affect their bottom line that much. at the same time, it it can't get worse. that's really the issue, if more is revealed, essentially >> eric schmidt did give us some color in an interview with fast company weighing in on what he calls information warfare. "we did not understand the extent to which governments would use hacking to control the information space. it was not something we anticipated strongly enough. i worry the russians in 2020 will have a lot more powerful tools. adds it's not fair to ask washington to solve all of those problems." does it surprise you, kara, the
inability of these smart people to it see around this big corner >> well, on one hand that's a p.r. thing they are all going to it say this i've said this before, i think last week, it's really big countries attacking companies and that is a very -- not just a p.r. thing, it is a reality. companies have never had to face countries and it is a warfare of the type it is a warfare, it really is. and i think theissue is who's going to handle it, is it our government, is it the company's, is it companies and government working together in any case it's really hard i think that's what eric was trying to communicate. this is something that was unforeseen, although i think probably could be a little more foreseen because they've been under attack in different ways for the decades they've been in existence. i think the question is, again, how does the government cooperate with these companies to stop this from happening? >> kara, i can't shake the feeling if this was unforeseen it was because the companies didn't want to foresee it. i remember a talk that eric schmidt gave several years ago
at, i believe it was a motorola event when zbogoogle owned that, saying they figured out ways to use artificial intelligence, which they weren't calling that at the time, to predict the stock market, but that would be evil, so they weren't going to do it. they knew this technology had extraordinary power and there were ways to use it that were manipulative and bad couldn't they have seen this coming >> well, some of it. you can't foresee everything, but i agree. i've made this argument all the time, whenever they are doing something great they say how smart they are whenever it's hard, they say it's very hard, if you only understood there is some merit to that argument i think the question is, do they foresee anything, and on the minor things they often screw up when they don't foresee something like the bullying on facebook live, or the murders or suicide that took place. they should have foreseen that, right? they should have had tools in place. i do think the technology is not there yet, this a.i. technology. they talk about it, but i don't imagine it's working the way
they need it to. and again, one of the biggest things to remember, these are massive data organizations this is billions and billions of transactions happening on a daily basis. i think the scale of this is so large and so complex and so open to vulnerability, that's really -- they are not going to be able to foresee everything, but they certainly should, today, be trying to scenario build and figure out what the most serious threat and then on down the line. >> kara, are we going to get to see you at all during the week as we watch some of these testimonies? >> too much kara, you know i think you should go to tony rahm and kurt wagner, who are doing a great job covering it. i'm just a talking head. i'm just the talent, i guess, these days >> kara, we'll talk to you soon. thanks so much kara swisher over at recode. to the latest on former trump campaign chairman paul manafort surrendering to federal authorities this morning
new charges against another former trump campaign, this time an adviser, george papadoupolis. aman >> that's right. we're expecting to see paul manafort this afternoon, about 1:30, so we'll keep an eye out this place is packed with reporters staking out every entrance to this facility here, but just within the past hour we've learned new information about this foreign policy adviser to the president who's pled guilty and is apparently cooperating with the special counsel's office, his name is george papadoupolis. he's pled guilty to making false statements to fbi agents in an interview january 27th, so just one week after inauguration day, one of the foreign policy advisers for the trump campaign was meeting with the fbi to discussion all this. he allegedly lied to fbi agents concerning about the timing, extent, and nature of his relationships and interactions with foreign nationals tied with
russian government officials the documents here are astonishing, michelle, in terms of who papadoupolis was allegedly meeting with he was meeting with a mysterious professor in england and also a female russian national who was introduced to him as a relative of vladimir putin, the president of russia, and at one point in e-mails referred to as vladimir putin's niece. papadoupolis then advocated for a meeting between trump and putin or trump campaign officials and russian officials to discuss ongoing relations between the united states and russia during the course of the campaign the president today has been tweeting a little bit about this he says, sorry, but this is years ago before paul manafort was part of the trump campaign, but why aren't crooked hillary and the dems the focus the president very frustrated with the allegations against paul manafort, his former campaign chair today, and he goes on to say also, there is no collusion. so the president underscoring the point he's made throughout this, which is he -- neither he
nor anybody else affiliated with his campaign colluded with the russians in order to help his campaign in 2016, but that's exactly what the special counsel is looking at today, michelle. progress today, i'm told now these are the last cases we'll see today. we're done for the day here, but we'll see more developments later on this afternoon. back over to you >> we've been looking through this papadoupolis indictment and as he's pled guilty here, and so what i gather from this, eamon, is he's guilty of lying about meetings, but doesn't appear the underlying meetings themselves would have been illegal, as long as he had honestly spoken about them do i read that correctly, do you think? >> that's right. what the allegation here is, that he's pleading to, is that he lied to fbi agents during the course of his interview. there's details in there about having destroyed a facebook account that he was using to conduct communications with people, closing down that account and reopening a new account, so it appears as if he
was in some ways trying to cover his tracks here and the fbi has pinned him down on that and he's agreed now to cooperate, we believe, based on the documents we're seeing this morning. so the problem for the trump campaign is that you now have a former insider, who was involved in meetings with the campaign, who is now cooperating with the fbi. the question is, what else does he know and what is he pleading guilty to this in exchange for in terms of providing information to the special counsel, robert mueller? all of that we'll discover in the weeks and months to come, i'm assuming this has been going on for nearly a year if you look at the alleged lie on january 27th, papadoupolis has been in this process for a while now and october 5th it looks like he was given what they call an exploding offer, which is on october 5th he was given this offer and said this expires at 2:00 p.m. today. he had to make a quick decision, carl >> nothing steels the mind like a deadline, and the document
does say arrested in july and then has met with the government on numerous occasions since then to provide information and answer questions eamon javers, talk to you in a bit. thank you so much in washington. as we come back, the fang rally rolls on why one investor says he's not buying netflix or amazon then, he was one of the first to review the original iphone ten years later he's spent a week with the iphone x steven levy is coming up later, robots may be coming to a walmart near you. we have video of that when "squawk alley" returns wait, what, what happened? i was having a good round, and then my friend, sheila, right as i was stepping into the tee box mentioned a tip a pro gave her. no. yep. did it help? it completely ruined my game. well, the truth is, that advice was never meant for you. i like you. you want to show me your swing? it's too soon. get advice that's right for you. investment management services from td ameritrade.
the white house says a fed chair announcement is skomicomig thursday of this week. steve? >> we have been able to confirm thursday is the day that president trump will choose his candidate, his nominee, for the potential -- for fed chair, potentially. obviously, the most powerful economic position in the world here's the candidates we understand he's choosing from, janet yellen, kevin warsh, gary cohn, former stanford economics professor john taylor, and fed governor jay powell, seen as the favorite, as you'll see in the next screen, where predictive is showing he's around 80% probability. and the next choice now looks like it's yellen at 11% probability, followed by warsh and cohn is in the 1% range.
powell, you can see, the runaway favorite carl, we have a very busy week already this week. the fed announcement, adp, jobs on friday, thursday was the day i had potential to play hooky. i guess i'm coming to the office on thursday. i don't know where you're going to be. >> no such luck for you, steve >> i guess so, steve >> i had a chance to go fishing that day, but now i've got to come into the office >> not for fish, not this week thank you, steve >> right, sure more for the markets to digest, meanwhile, the nasdaq hitting another record high with major tech stocks set to report this week, as well as hill testimony. for more, let's bring in ryan levet and larry haverty. welcome to both of you >> thank you >> hi, carl. >> ryan, i want to start with you. when you look at tech and this kind of looming regulatory environment, how much does that factor into the way you look at
the industry, particularly the googles, facebooks, twitters, versus the blockbuster earnings we're seeing does that overwhelm the regulatory concern >> i don't think it overwhelms i think investors are looking for growth in a slow growth world and unless we see a catalyst, we're going to continue to look for growth in a slow growth world and these are the companies that are driving earnings growth higher people are worried from a valuation perspective and regulatory perspective the good news is, you know, if you look at the top ten names of the nasdaq, medium price to sales is about five times today, compared to 20 times in the late 1990s. so, we are nowhere near where we were in the late 90s, so while there are risks from a regulatory perspective, looks good >> you're concerned that amazon is going to run into the law of large numbers, but how much of an impediment is that going to be five years ago people were saying the same thing about apple when it was trading under
what would now be $100 and it's knocking on the door of $167 as we speak >> well, you can identify, you know, how big the markets serves are and, of course, carl, one of the things that happened with apple in the last ten years is the smartphone market just exploded beyond anyone's wildest comprehension, but amazon, you can know one thing, which is where you are right now, and they have revenues of about $160 billion. i would tell you that outside of amazon web services, they don't make very much profit in that. and you're going to have physical constraints to double sales in the next five years that means adding $160 billion of revenue and somebody's got to deliver that stuff to the consumer we have this locker program right now, prime is spectacular in terms of creating a fly wheel around amazon's business, but at the end of the day, the commerce
doesn't make any money, and it's sort of like the road runner and the coyote in the warner bros. cartoons the coyote eventually runs off the cliff. if the market ever wants to hold amazon to a profit standard, i think there's going to be a real problem. and look at what they are doing in the last three, four months they went into the food retailing industry amazon's got a 40 cash flow multiple and the food retail industry is a 6.8 multiple stocks went up rumored to get into the pbm index, that's a 12 multiple index. live ticketing, that's a 12 multiple business. none of these businesses does the market force amazon to report profits as it does live nation, whole foods, et cetera eventually, the market is going to say, no, we're going to be
accountable, amazon, and i have a problem when that happens. i don't know when it's going to be taking way longer than i would have thought >> brian, this week, what do we need to see from facebook, which has some pretty nice margins, and apple, which investors seem to have turned around on with the iphone x unveiling what do we need to see from them or hear from them to keep this going? >> obviously, going to need to continue to see positive guidance and expectations of future earnings growth, and i think we are going to see that there is, you know, the marketing dollars being spent in facebook, the new demand for the new iphones. those are things that continue to grow in this world, in a world it is hard to find it. so, you know, to me i think what people are getting overly concerned looking at a price earnings multiple and not looking at what really matters more to markets is the bottom line on sales, price to sales multiples on a lot of these names continue to look very
attractive >> are we in an environment where -- we had a discussion last week about amazon's costs, but an environment where facebook can say, yeah -- they said this before, we're going to spend more on x, y, z, and eventually after some initial concerns the market gets past it >> it does get past it, and the reality is, these are companies -- this is not the 1990s dot com companies they are not not companies with viable business lines. these are companies disrupting across a broad array of industry, making a ton of money, and with the exception of facebook on a price to sales basis, which might be elevated, the rest really aren't >> all right i want to give you the final word the downside here, how much is there if the market sort of gets more rational about these names, as you seem to suggest, what kind of a drop are we looking at >> i think you have to look at two classes. i think the facebooks, apples,
and googles, i don't think there's very much downside, carl, because these are very profitable companies they generate monstrous amounts of cash flow you go into an apple store, i will challenge you to it find a mark down in the apple store apple's business quality just continues to get better, because there are more apps and these generate recurring revenue and apple collects a 35% toll with no capital investment. it's just a wonderful, wonderful business netflix and amazon are another story. there's no profits there the valuations are very high, and in the '70s we used to squirm about a 50 multiple in the nifty '50 period the multiple on amazon and netflix is, if you look at earnings per share, is way, way more than 50 times if rates go up, carl -- >> we got to leave it there. appreciate it. barry levet from oppenheimer when we come back, elon musk
gives his twitter followers a sneak peek at his boring tunnel project. "squawk alley" back in a moment. at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be.
elon musk giving his twitter followers a first look at his boring tunnel project currently under construction beneath l.a musk said the second machine to dig the tunnels is, "almost ready. musk taking his show to social media with photo evidence. >> get it, boring. it's boring. >> yes, that's not new >> okay. >> right now, when tesla stockwise is doing so well, looks like he's innovating in so many areas, but at some point you got to wonder is he stretching himself too thin, because we've got solar, we've got electric cars, we've got space. we've got hyperloop, which, granted, other companies are doing, but it was his idea he put out there, now you've got he's digging holes in the ground for cars to travel faster.
i mean, more power to him for tackling the big problems like traffic and congestion, not just avatars. >> also around mobility and transportation and the power to move around. it's not like he's doing cloud and entertainment, right >> but he's in space and underground. can't even stick to one planet >> what do you do if you're claustrophobic >> you walk. >> that's a problem. >> not getting in that thing >> like the chunnel. right? that's a long walk >> i don't like the tunnel in boston let's get to seema mody here for the european close about 90 seconds away good morning, seema. >> good morning. european stocks beginning the week on a positive note led by markets in spain more than 2% gain. take a look at the ibex wiping out its losses from friday after the spanish government imposed direct control of catalonia and called for elections in december after the region's leaders declared independence. spanish prosecutors are seeking
rebellion and sedition charges against the leaders. yesterday thousands in barcelona participated in a pro spain rally. the latest polls in spanish newspapers report more catalans are against the declaration of independence than in favor meantime in terms of the market reaction, we showed you the equity index, but check out the spanish ten year, the yield falling to lows not seen since august then we turn to earnings hsbc swinging to a quarterly profit compared to a year ago, helped by strong results in asia, but also news of higher than expected costs sending the stock down by 1.6% in pharma, switzerland's novartis has agreed to acquire advanced accelerator applications for $3.9 billion. this deal enhances novartis' cancer drug portfolio and focus on pharmaceuticals, which uses
radioactive substances advanced accelerator shares up almost 20% on the day. and as we look at the nasdaq at record highs, check out some of the notable tech stocks in europe moving higher, specifically the apple european suppliers after apple said preorders of the new iphone x are, quote, off the charts ams, st micro all higher on the day. carl, sending it back to you >> thank you very much let's get to sue herera, as well, back at hq and get an update >> thanks so much, here's what's happening at this hour, everyone former trump campaign manager paul manafort and rick gates due in court at 1:30 p.m. eastern time the two have been charged with 12 counts, including money laundering manafort leaving fbi headquarters earlier this morning. japanese prime minister shinzo abe welcoming the philippines president rodrigo dew te duterte to japan
kcatalonian police entering government buildings in barcelona. this is the first week since spain's central government overturned a catalonia independence declaration by firing elected leaders back at home, consumers plan to spend more this holiday shopping season. according to a national survey, consumers will spend an average of $967. that's up nearly 3.5% from last year 59% say they will shop online, and that would be a record high. that's the news update this hour back downtown to "squawk alley." john, i'll acceptsend it back t. >> thank you, sue. still to come, one of the first people to review apple's original iphone. ten years later he spent a week with the newest iphone x steven levy joins us at post 9 whensqwkll" tus. "ua aeyrern my name is jeff sheldon,
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our next guest was selected by steve jobs as one of the first reviewers of the very first iphone and has had a chance to spend a week with the iphone x he says those who shell out the cash for the device will enjoy the screen and battery device today, but the real payout might come when we figure out what it can do tomorrow. steven levy is the editor of "back channel. has the iphone x with him now. always good to have a legend at the desk welcome back >> thank you >> what do you think >> well, i like it one of the things, you know, immediately you're going to get a benefit of is the screen,
which fills up the whole front of it there, and it's actually just as big, you know, little longer diagonally. >> show it to camera >> little fatter than the big size plus phones, which are bulky in your pocket you get it all here and it's a very sharp screen, it's got what's called oled technology in it, super bright so if you're, you know, ever buying anything, pay $1,000 for a phone, every time you look at it, you think you paid for something. >> the number one question i see from people is the lack of touch i.d., now face i.d you said you had to give it a look, are you talking to me in order to open it >> do it now >> took a little while to get used to. i think i've got it now. it unlocked, bang. >> that's it, that's one movement >> so maybe it wasn't fair took me a couple days before i really mastered it, because quite reasonably apple doesn't want it to turn on any time it's sitting across the table and
thinks it caught a glimpse of you, right >> i was struck during the commercial break i was trying to open it with my face and very quickly the padlock logo shook its head >> yeah, and if you do it a few times, then i can't get in it unless i put the code in if it feels someone is trying to break in, by the fifth time they'll bring a mask of you. >> have you held it up to a photo of yourself? >> i did held it up to a photo, didn't work >> did work? >> did not work. apparently, it takes 30,000 dots in your face, and really is intense. i think whatthat points to is eventually it's going to be used not just for the apple users of turning on the phone and apple pay now, but other people, third-party developers are going to use it and your face is going to be a big part of personalization in other apps like facebook maybe. >> how good does the lighting have to be in the room >> not bad as it turned out, i was in a dim room last night and it came on >> so, what developers do with
this is going to add to the value of this. to what type of consumer do you say, hey, go out as soon as you can get one and get this as a reviewer you have to consider the broad public and whether this is a phone for everyone or just for the die hards. >> if you have a pocketbook that can take it, i say now is the time to upgrade. you've probably been waiting i think a lot of people -- you know, apple introduced two phones the same day, introduced the 8 and the x, right, which is crazy, like toyota saying here's our 2017 version, here's our 2020 version, which one do you want to buy? so a lot of people were waiting for this and i think they'll find it worth the extra few dollars a month in an installment plan or extra couple hundred dollars to buy this one. >> we mentioned your original review of the phone and one of the lines, this is great, june '07, one of the most hyped consumer products ever comes close to justifying the bombast. can we say something similar about the x, or not? >> well, i think it is an iteration.
it is, you know, it's an excellent woun, right? because you know something is good when you have to learn new things in order to use it. i say any new upgrade can't be very dramatic if you do the same exact things for it. i think this is a major upgrade, but isn't as much as an earthquake as the original iphone >> were there any rules? what did you have to sign when they gave you this thing >> why don't you have the otterbox >> my first born, now that the embargo is over, can breathe easy >> further on that topic, there's an apple engineer's daughter, at least she claimed to be, posted a video on youtube before anyone was supposed to. what's worse, it was video of the iphone taken from the iphone x, taken from inside apple's campus, apple's cafeteria. lots of no-noes there. the word is, apple hasn't officially said anything, but this engineer was fired. how different is that from classic apple? >> well, i think what happened
was apparently, you know, people took that video and looked at it frame by frame and maybe saw something an employee would have that i didn't get on my phone. i don't know the circumstances of it. in any case, the optics aren't great for apple that they canned him, but they are very hard core about secrecy and probably they feel if they didn't take strong action then employees might be a little lax >> how did they get the phone to you, mail it >> no, no, no, no. i had to go and, you know -- >> blindfold you on the trip there? >> yeah, yeah. >> one last thing, does this rebut the argument that phone technology's essentially plateaued, all the bells and whistles we'd ever need, we have >> i think there's room for improvement, but i feel -- and i wrote this in "backchannel," that in the next ten years the iphone 20, we may not be talking about it so much there might be something different coming along
i think we're on a path where what apple says a little bit about this phone is they've made it invisible by putting the screen there things are going to get literally invisible and that's what we're moving towards. i feel the future belongs to augmented reality, where we don't carry along the physical things, but somehow maybe through glasses or something else we're going to be computing by just moving our arms in the air and seeing things. >> let's do this >> 30,000-point scan of your face how can people say there's nothing new? >> steven, thank you so much great to see you when we return, walmart is rolling back price and rolling out robots details in a moment. first up, rick santelli, what are you watching? >> wow, we had big data, strong personal income, strong personal spending, and we had some dallas fed data that was superstrong. why are rates not moving hheigr? we'll talk about that after the break.
coming up today, "halftime report" noon eastern, are stocks in a sweet spot? jim cramer says yes, but we have a analyst saying they are at an inflection point plus, the analyst on jcpenney and why macy's future is also getting worse. don't miss our interview on "halftime report." we'll reveal the name and debate whether you should bail, as well see you in a few minutes carl >> all right, scott, thank you for that we did get a little ahead of
ourselves this morning, daylight saving time ended last night across europe, which means until our clocks turn back next weekend, european stocks will close at 12:30 eastern, obviously, in about 45 minutes let's get over to the cme group, rick santelli, and get the santelli exchange. hey, rick. >> good morning, carl. let's go through some of the data points today. so we had personal income up .4, that's the second best number of the year we had spending up 1%. you know, that goes back to august of '09, but it's still the fifth best number in 20 years. let's throw another chart up there, shall we? let's look what happened in regard to the dallas fed activity number. you see it on your screen. you have to go back to '06, but this series of data points didn't start until '04, very lofty. finally, let's consider what ten-year note yields did let's put up an intraday of ten-year note yields data points pr 10:30 and 8:00.
can you see bumps there? not at all for the most part it's been a drippy sort of day doesn't seem to be able to hold the selloffs that push interest rates higher so what's going on steve liesman, all the part-time friend people friendly with cnbc say for the most part it was already embedded in the gdp reports, and i get that, but the real issue i see that we should talk about is you have big events and you have fundamentals and they share some big spaces together. it's called the markets. there's one set of markets, basically one fixed income market, equity market and you have both of these competing forces vying for the market's attention. so whether it was the ecb, the bank of japan, and the ecb was a biggie, then we have our fed this week. you contrast that with, of course, friday being the big deal in terms of the labor report, and they have been on the spongy side. and the gps of this may be there was, obviously, hurricane influences, a lot of big cross
currents there but the real point is, is that we have the fed, then after that, of course, we have the employment report. but why is this important? because most of the time the employment report represents a big dot on people's charts usually it's a culmination of things so the real issue i'm talking about here is the 244 1/2 yield close. what do i always say about charting it's a prioritized list. first you have dailies, then you have weeklies, then you have monthlies, and if these moves are significant, you need to see all these things line up the point is, we're in the gray area hovering below, we did take out the last supplies, so the short answer is, if we close this week, this friday, after all of this, and we close above 245, most likely look for bigger momentum trade on treasuries otherwise, just watch this big gray zone probably from about
2.28 all the way up to 2.45. john fortt, it's all yours >> all right, thank you, rick santelli and straight ahead, it's not just amazon looking to disrupt the health care and pharma space. online pharma company capse s pl of its own. detai details when "squawk alley" returns. where's gary? 'saved money on motorcycle insurance with geico. goin' up the country. later, gary'
health insurance looking to disrupt the industry, it's called capsule capsule pharmacy looking to streamline the prescription process by offering free at-home delivery for more now we're joined by capsule pharmacy ceo, good to have you great to have you here. >> thanks for having me. >> let me make sure you understand how this works. you don't have any storefronts you don't want any storefronts instead, somehow i get my prescription to you, and you deliver it how soon, by when >> exactly. >> so we have a single location in midtown location and we deliver to all five boroughs in new york city and we can turn it around in two hours. >> how much do you charge mow the delivery >> the same price as any other pharmacy and no fee for delivery, completely free to use that. >> and can anybody use it? >> i think about just us here, westbound' have of cvs caremark. can i still get my prescription filled by you, even though i've got a pbm i'm routed through to the office >> absolutely.
love for to you try it out. >> so how hard is it to do this because you say your cure yerts go through background checks and go through bicycle safety and make sure they are hipaa complaint. i imagine something like this is something that you want to expand or others certainly will want to expand outside of new york city. is that going to be really expensive? >> we think everybody needs a better pharmacy experience starting here in new york and then stealing the business both nationally and internationally, and i think what's unique is about capsules it's a combination of a bunch of different things that's hard to do we've built a brand that consumers love we have a physical operation that's efficient, and we've built a real technology platform that powers everything, and so the unique part of capsules bringing the three things together in a really unique combination to enable that to happen >> so were you moved by these reports of what amazon is trying to do in wholesale licenses and do you think their reaction to that was overdone? what are you afraid they are going to do? >> you know, i think, there's kind of two things with amazon
that we think can happen amazon is going to do one of two things they are going to really leverage their existing capabilities in warehousing and distribution, and so one, which i think is a consensus view. they will open a mail order pharmacy and focus on the cash generic market which is $30 billion. walmart currently dominates that and it's really bad for walmart. i think the other part that's potentially interesting to think about that we haven't heard a lot of people talk about is there's four data points with amazon getting the wholesale distribution market. one, when you look at the profit pool of where the drug supply chain is today, you've got all of the margin for the big wholesalers, all of that is in generic drugs. you think about 75% margin there. when you look at real where they are making money, selling to small independent pharmacies, and virtually 100% of the profit for these companies are derived there. data point number two is there's -- out of the 70,000 pharmacies in america, there's 22,000 independents. the third data somers point when
i look at where amazon's business has gone over the last ten years, it's really a third-party business they are enabling commerce rather than being the retailer those three things kind of leave me to believe that amazon could really come in user scale advantage and collapse the wholesale market and it's really bad. >> another potential competitor out there, when you look at the cst/aetna deal, it looked designed to prevent people from going to you you're going to use this health insurance company, which is going to direct me to this particular pharmacy which will have services there and somehow push those customers only to places -- and not be allowed to use you. aren't you worried about that? >> i think the cvs/aetna thing felt pretty inevitable to us, cvs trying to re-brand around healthcare sales are down a couple of percent every quarter. i think they think this is a way
to expand the business neither have figured out how to build high trust with consumers and that's what's needed to make a dent in health sglaer that wouldn't take customers away from you >> aetna and cvs have already had a long-standing relationship so the ability for the two of them to create whatever kind of network they wanted to create has existed for many years, so i don't see the actual combination through an ownership structure real changing the relationship they have already built over the last three or four years. >> and prevent people from going two if they want to. >> consumers want choice. >> got if. >> eric, see how it goes. >> thank you >> maybe amazon will just buy you some day. >> as he winked or raised his eyebrows there >> we did take a brief leg lower here on some headlines that had regard tax cuts. we'll talk about that in a moment, but retreating towards the lows of the session. be right back.
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as you can see, 17% for the month as they get an upgrade over bmo john, nice call. saying after underperforming for so long finally displaying some evidence of operating leverage >> a little bit anoinds floyd at all the attention nvidia has been getting around ai arguing that intel deserves some, too. investors giving them some attention over the past couple of weeks for sure. >> and how about the downgrade of amd over at morgan stanley going to an $8 target? they say that crypto and gaming flat to down maybe next year and obviously we know how much the stock is run. >> yes, indeed we'll see how amd has bet on the pc and plays out this holiday season if pcs continue to be hot and the new chip of theirs continues to be hot, watch out. >> speaking of ai, walmart is planning to roll out robots in more than 50 stores across the country to help replenish and monitor inventory. the robots stand two feet tall, can scan shelves for misplace
and mislabeled items and pass that information on to human employees. walmart says the robots will not replace workers or affect employee head count. >> make them a lot more efficient in figuring out how to clean up the shelves and restock at this point. >> people can't look at shelves and tell us that things are out of place. >> look how fast that thing goes. >> i don't get the argument. you kind of had sloppy shelves before and now you've decided to do something about it with a robot instead of a person. how are they going to do it before >> that person will be better deployed perhaps >> yeah. more productive. they can do other things besides having to spend hours going shelf by shelf, i would think. >> they can do the dirty work of actually doing what the robot says, you know the robot says fill this shelf >> why is that dirty work? >> walking down the aisle and looking at the shelf. >> replenishing the shelves are crucial. >> it should look like this. tell the lackie to go fix it maybe the robot should be the one fixing the shelves. >> before we toss to the judge,
we mentioned the dow and all stocks actually taking a dip as bloomberg says that corporate rate perhaps might go down gradually to 20% by 2022, raises a question of what the market is real expecting in terms of that range? >> we keep asking what's priced in maybe we're getting an answer today. let's get over to the judge and "the half. carl, thanks so much welcome to "the halftime report." stocks falling near the lows of the session on a report out of washington regarding the president's tax plan yuan mui live in did have c. >> republican lawmakers are considering phasing in the reduction of the corporate tax rate to 20%. that report does caution that this is something that's still under discussion, and the plan is not yet final, but this is something that we have heard speculated about for quite a few weeks now. readers