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tv   Squawk Alley  CNBC  November 1, 2018 11:00am-12:00pm EDT

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♪ ♪ ♪ good thursday morning. welcome to "squawk alley." i am carl quintanilla with morgan brennan and jon fortt all faang names in the red, including apple which reports after the bell tonight top white house economic adviser larry kudlow says that sector was overdue for a correction >> i think a lot of big, big tech stocks, the faang stocks got topepy it is just one man's opinion, not the white house view i think corrections are probably
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overdue. we had a bigger one last winter. i don't think trade enters into it >> joining us at post 9, vc capitalist allen patrickof welcome back >> nice to be here. >> despite the selloff, has anything really changed? >> it's the same, every time i come back, seems like we talk about the faang, are they going up, down, what's going to happen to the report for earnings exciting moves are the google walkout if it happens. >> yes what's your sense, for example, there's a note out of b of a, they're seeing deceleration on app store down loads, pointing a lot to china how much should this be taken seriously ahead of the apple print tonight. >> they're analyzing everything about every app so they can
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compare, my guess is all of the data goes back to them there are leading indicators i am working in podcast area, trying to find something to give that same indication to people in the podcast industry. it doesn't exist. >> when the father of the worldwide web comes out and says maybe technology giants have grown so dominant they may need to be broken up, unless there are disrupters that come along -- do you see startup companies that can do that >> i wrote a couple of notes for myself coming on here. facebook made 71 acquisitions. google made 214. and amazon made 91 in the last two years in the last year that's a lot of companies to buy. they are absorbing any technology
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they have people looking for new technologies and absorb them inevitably, these companies get too big. i mean, we have been through this with the robert barrons, previous century, went through it breaking up conglomerates i am not in favor of it, but if something is absorbing too much of our business system, i think you have to look at it carefully. i think congress is going to certainly look at it you can break it up, google would be easy to take youtube, do something else with it. instagram out of something >> what do you view as fundamentally important as a driver in technology now you talked about the stocks that are up, that are down, apple up 30 plus% f percent for the year. netflix more than that, 53%. it is not as if the sky is
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falling. is it credit cards on file and ability to have loyal paying customers versus relying on an advertising market when it is dominated by a couple of players? what are the drivers >> all of us in the venture business are concerned by dominance of advertising and how advertising is a very vulnerable area at the moment because not the faangs in total but the facebooks and googles absorb a lot of online advertising. astronomical well over 50%. so you want to find another source, i see a friend sitting out there. >> yes. >> i'm sorry >> that's okay, we will ask henry blodget to move far away from the set >> you want an alternative model, is subscription model is more attractive than an advertising model. someday you can develop an annuity base around it, has some
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couldn't knew the to it. advertising is very fickle anyone in ad tekin tch in advern is suffering, except for the google and facebooks of the world. >> we were thinking about 2019 and the ipo calendar, bring us uber, lift, post mates, who knows, the list is long. did october do anything to change that? >> no. ipos are effected by what happens a week or two right before it because the psychology changes. i have seen so many deals set to go, two days before a plane crashes or something happens and they delay it. i think you're always vulnerable to that. but i don't think they'll have any impact on whether they go public or not. >> what about not just market conditions but cost to capital,
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these companies have gotten big on not just cheap money but almost free money. >> well, yes i mean, the prices of which people are raising money at, particularly in these -- look at coin base yesterday, raised money. i don't want to say, 15 billion or 8, i can't remember the numbers get so big you get into that rarified atmosphere, lot of people put large amounts of money like the vision fund into prices in companies that they think are prepublic offerings. that's the assumption, they'll go public in 12 months i have been through cycles enough times, they plan to go public in 12 months, and 36 and 16 months later still private. >> before we get to the next story i have to ask the point you made actually we're going to aditi first. google employees are staging a walkout in light of the recent
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sexual harassment scandals set to begin after 11:00 a.m. in every time zone. looking at a live helicopter shot google offices in new york city, should begin shortly aditi roy is outside their offices in san francisco aditi, we have seen them in asia and europe what can you tell us so far? >> reporter: we have right now we're aiting, a few hours from the google sf walkout. as you mention powerful images around the world and people walking away from desks at google worldwide look at some pictures. they're leaving their desk in singapore, tokyo, berlin, dublin zurich, london they're documenting their journey on #google walkout on twitter. employees at the new york offices are about to walk out at any minute 11:10 is the time they all leave their desks worldwide. they have 85,000 employees around the world and among some things they're
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asking for is an end to forced arbitration in harassment cases and gender pay equity. protests are happening after a bombshell report in "new york times" last week that revealed that the father of the android, andy rubin, took a $90 million exit package after a response to incredible sexual harassment claim. that prompted the google ceo to acknowledge in the last couple of years the company terminated 48 people without exit packages for harassment issues, included 13 senior managers and above just this week, alphabet executive also named in the article for having been accused of sexual harassment leaving the company, and again, you can see pictures coming in from google's new york offices in chelsea. workers are expected to walk out any minute you can see them coming out the door, a lot of them. a sizable number of employees
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you can see flooding out the doors in new york city, protesting these harassment issues going on at the company we know that he is supportive of workers, speaking at the deal book krchconference later, and l hear about what's taking place at his company powerful images in new york and throughout the world overnight of google workers coming out in protest of the company's harassment issues. back to you guys >> aditi, it doesn't seem to be effecting shares of google trading is largely flat. is the way to start to think about this that if you continue to see unrest, maybe displeasure within the google employee ranks it could be harder to retain and recruit future workers >> reporter: it is a huge issue, right? the companies come out with diversity reports. the latest at google found of all total employees, 31% of
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women. 25% or so are leaders, women so the company definitely as is the case with many silicon valley companies, they have a lot of work to do in terms of issues like gender pay equity and more representation of women, especially in leadership positions. no doubt these are issues weighing heavily on the company at this moment >> aditi, thanks is this text version of labor unrest we don't have a lot of unions in silicon valley, but demands from google employees sound similar to what you hear from organized labor. we have seen amazon warehouse workers trying to make dmanldems and unionize years ago, apple workers before they got morale there tighter starting to have some unrest should we expect more, is this an issue that investors and those in tech need to watch for?
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>> i don't want to seem insensitive because i am sensitive. i think at the end of the day it is not going to effect google stock or their employment prospects. from everything i heard, and i met many people who work there, they like working there. it is a positive company they will make the changes as well a will all other companies it is a reality. people are focused on hr the hr officer in a company today is a lot more important than five or ten years ago >> seems to me there's a fine line, i know google has a long-standing reputation for being transparent with workers, encouraging all voices to come forward. seems to me there's a fine line between mayhem and having too many voices and too much unrest if that's where it leads to versus leadership actually being able to lead and set a direction. >> you know, the fact that everybody is walking out on the
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street today i don't think is symbolic you get caught up in something and everybody is participating, you want to be one of the people, don't want to be sitting at your desk i think management is clearly focused on it and they're sensitive to the issue the same as the privacy issue. privacy is also front and center today, which it wasn't like five years ago. >> we'll see if he talks about it later it has been six years since ellen powell filed a suit against kleiner berkins, and she lost on every count. whether it is that or disclosing data on diversity, there have been raining issues on tech and venture capital. >> let's not throw in venture capital. we have been tainted a little. >> especially when it comes to representation of women among investors and ways that investment dollars are doled out, do they get the shares of
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their innovation and creativity, i won't say fair share, how do you count what fair is >> i am personally sensitive, i hired the first woman in venture business that became chairman of the national venture capital joerks two of the six partners are women. we have probably more women working in the professional area overall in our firm, and a lot of women entrepreneurs we back i see that happening i think you're seeing more women who deserve to be back coming around when i left, two women were sitting in the reception room. you're seeing more women entrepreneurs around >> we know what the data is on males on boards. 99%. >> that's an area that is certainly being addressed by all public companies public companies i have been on, it is a major focus. and private companies as well. i just helped recruit a woman
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for one of our private companies, looking towards being public in a couple of years, making sure they've got good representation overall >> by the way, i want to make the point very clear that the point i was making before more broadly on management versus employee discussions and debates and unrest more broadly about some of the issues at google in general, not specifically about women and diversity. but aditi roy, thank you for bringing us the latest we'll continue to monitor this all day. don't miss sundar pichai later this afternoon he sits down at the deal book conference this afternoon at 3:30 eastern ahead of earnings this afternoon, is apple a buying opportunity? an apple bull and the only apple bear we could find join us next
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bear we could find join us next to so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. more "squawk alley" to come. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity.
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who has a buy on the stock thanks for joining us today. >> good to be here >> based on you've got the sell rating on apple, looks like your price target implies 24% down side from here, why are you bearish? >> thanks for the question i have a concern about 2019 and iphone shipments simply because the iphone x has been extremely successful my work shows about 50 million consumers bought in 2018 they were supposed to refresh in '19 but did in '18. they were excited by the iphone x. you have 50 million out of the market in '19. a new line up of phones are coming into the market, they're going to miss lower. i expect shipments to be down against last year.
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>> rob, you have a buy on the rating you think the stock is going higher why do you disagree? >> i'm looking for better unit growth in 2019 not a ton, but iphone units haven't been growing for years this year grew maybe 1%. next year could grow 2 or 3% two things going on. one is the xs max, i expect that to be a big seller not having a plus size version of the x was noticeably absent i think there's demand for the larger screen phone. at the end of the day, it is iphone asps driving the iphone revenue growth although last year we had a huge 17% jump in iphone asp, i expect them to be up 5 or 6%. still getting high single digits iphone revenue growth which is enough for apple stock to work
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>> the refresh cyclehas been lacking for years. despite the relatively good reception for the iphone x, it was no super cycle not sure why you think if the iphone xs and max are what people are looking for, bigger screens, better cameras, et cetera, why that wouldn't drive even more demand than you might have expected, and the average selling price, which even you were saying are higher this quarter than the street's consensus, why it wouldn't follow through to the holiday. >> thanks, jon on the first question i think the r, x and max are what people expect i expect them to be successful but if you have 50 million buyers, who are buyers that refresh every two, three years, who decided to refresh in '18 because they were excited by the first x, they're not going to be there for the xr, the max or x
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i agree with the bull argument that the s, xr and max will be successful, but a market with 50 million users, 7% of total annual typical market are actually missing then on the second question, yes, this quarter is the quarter where apple earnings push into channels new phones. when you look at that level, $1,000 phone and $750 phone, these phones are pushing, and i think the street is slightly underestimating in expectations for q4, fiscal q1. when fiscal q2 comes, what happens? dmanld is below expectations, they have to adjust shipments. and this comes on the higher end
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of the market. so that means in q1, fiscal q2, what we see is disappointing number of phones being shipped and disappointing asps >> rob, journal ransom numbers about the average time people spend with the phone before they replace it, 2.8 years versus 2.4 years a couple years ago how high can that number go? >> i think the replacement cycle for smart phones is pushing from two years for three years. i think that's something for the whole market to deal with. i think not to say and sound corny, one of the metrics that matters, how much people use the phone. i think this is the difference between pcs where replacement cycle has stretched out. if you look at a phone, the average person checks the phone something like 150 times a day so because it is such an
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important device, i think people are looking to keep a relatively fresh device i don't think pushing beyond three years is likely for that important a product. >> quickly before we let you go, with earnings after the bell, key thing you're watching. >> key thing to be watching is apple's management commands, reception of new phones. i think numbers are less important than liquidity. >> rob, quickly. you? >> december quarter guide and commentary on china. >> gentlemen, thank you. >> thank you when we come back, fitbit, speaking of devices, rising on earnings ceo joins usit wh dow session
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highs of 214
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good morning again,
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everybody. i am sue herera. here's your cnbc news update the alleged synagogue shooter, robert bowers, pleading not guilty to federal charges that could put him on death row he was arraigned after a grand jury issued a 44 count indictment that included murder and hate crimes charges. china's premier sitting down for talks with the u.s. delegation of mostly republican senators it took place in beijing both sides calling for mutual respect, amid an increasingly bitter trade war and ahead of an upcoming meeting between their leaders. >> your country and our country are competitors but not adversaries, and we believe that with mutual respect we can continue to prosper together the head of the russian commission investigating launch failure of a manned mission to space says the failure was caused by a damaged sensor a russian cosmonaut, u.s. astronaut had to abort the
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mission and plunged back to earth in an emergency landing. you're up to date. that's the news update this hour jon, back to you downtown. >> thank you, sue. meanwhile, shares of fitbit are soaring now, up nearly 25% after the company swung through a surprise profit and posted better than expected sales joining us exclusively is james park, ceo of fitbit. good morning >> thanks for having me. >> quite a reaction here there's something i wanted to drill down on in what you said on the call. you didn't adjust full year outlook, saying unless change is material, you wouldn't adjust the outlook. does that mean that the change in revenue expectation overall would have to be greater than 150 million, kind of that 10% definition of material off the $1.5 billion revenue guide for you to change it
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is that how we should understand that >> i think the way you should look at it is we are reaffirming four year guidance on revenue, being prudent going into q4. that said, we have a lot of momentum we're actually expecting to post profitability in q4 like in q3 again, a lot of positive momentum going into the holiday season >> 49% of sales for you guys for smart watches, a category where you didn't even exist a couple of years ago your units are down. tell me how much of this is your tracker users migrating smart watches versus how much are you expanding your overall pool of fitbit users so we should expect that smart watch momentum to continue beyond when the tracker users upgraded >> so, demand for smart watch is solid. as you mentioned, 14 months ago, we had 0% share in the market. now we're number two, beating
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the likes of samsung so we have really great momentum what we said on the call is looking ahead to 2019 we expect unit shipments to grow, year over year, which is the first time we are able to say that in a while. that means we're gaining market share in a fast growing market >> james, back in august we spoke to you after earnings, then the stock was falling you said at the time you thought investors were concerned about potential tariffs since then fitbit escaped the tariffs in terms of trade war fears, where that potentially effects you, is the risk just about over in how you think about that? >> we're fortunate the administration after a lot of careful consideration removed us from the last set of tariffs we expect that rationale to continue to any future discussions. that said in parallel, we're also rethinking our supply chain to further insulate and mitigate
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any possible impacts in the future i think we're fairly confident that we can avoid any impacts to tariffs. and that's reflected in the guidance for q4 and positive outlook for 2019 as well >> full year guide, cap ex a percentage of revenue, 3.5 how does that compare with prior years and what do you put that money towards? >> again, that's a sign we are becoming incredibly efficient as a company, not just the cap ex side investors were looking for us to become more efficient. that's reflected in our quarter and guidance we had an amazing quarter, we beat on revenue, posted the first profitability in two years. we are guiding to profitability again in q4. so i'm proud of our results. >> james, finally talk to me about inventory levels because that's where we often see growing and shifting hardware
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companies get tripped up saw it with go pro as you head into the holidays and out of the holiday season, how tight a control on inventory levels so that, a, your sell through works as expected through the holidays, and b, you don't end up with a glut of inventory that effects sales in the first half of next year? >> so we're coming into the holidays with a clean inventory and channel levels which is a market improvement over prior years. so that's a positive step. again, it is reflected in q4 guidance, we're being prudent in the way we run the business. >> all right james park ceo of fitbit with the stock up 25%. thanks for being with us >> thank you. taking a look at where we stand in the market, session highs. dow up 213 points. the nasdaq up over 1%. a lot more "squawk alley" still
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it has been an hour and a half since the president tweeted he had a long and good conversation with the chinese president xi reuters saying he and the president wish to expand china, u.s. trade cooperation, saying the economic teams of both
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countries should strengthen their contacts and push for a trade solution that is mutually acceptable with that, a little enthusiasm has the dow up 200 points. >> not clear how much we should take president trump's tweets just as straight ahead factual he has a way of playing fast and loose with the details, but the market does appear to at least have gotten a positive sentiment out of the direction of that. >> working on a third day up for stocks after a tough october for tech stocks, people are hoping it will be a november to remember after an october to forget, posting the worst monthly performance in a decade. faang stocks are a big catalyst for that decline amazon alone, declines of 20%. apple reporting after the bell today. the last of the big faang stocks where does tech go from here henry blodget is with us, and denise chism as well good morning to you both. >> great to be here. >> good morning.
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>> have values gotten good enough since october >> they're getting there they're valued on cash flow, multiples are high could come in higher, but i don't think that was a huge issue. >> do you believe anything materially changed in terms of earnings, cash flow going into next year? >> i think for some of them certainly. you look at facebook, you see deceleration there some others seeing deceleration. it is the phase of the life cycle. you see gradual multiple compression. eventually they'll trade 15 to 20 times earnings. >> you say it almost every time you're on. >> hopefully it happens gradually and they grow fast and the stock can go up. no expectation that it is different for them >> you have three days of triple digit gains. is the correction over >> well, i don't know if it is over it is hard to say in terms of duration of corrections have a wide range historically. but i'll tell you signals i am
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watching what's different from this correction relative to the one in january was a sharp defensive rotation at the sector level like staple sectors. consumers and utilities outperforming. what's anomalous is the minimal credit confirmation out of high yield spreads in the u.s. market when you look at that historically, that's a key factor to watch. that lack of credit confirmation is usually predictive of sharply higher returns in the s&p 500 in six months and quick return to cyclicality. it has been a positive risk reward for a cyclical rotation over the next six months >> henry, we talked about the tech sector increasingly meaningless because if you look at the trends in enterprise tech, particularly around cloud, there's talk of the era beyond cloud lock in.
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you have microsoft making data open, ibm trying to make data open with redhat, oracle numbers are fuzzy, and trying to blend with a hybrid cloud strategy and apple raising prices on devices in the face of flat sales and trying to drive subscription revenue completely different effects you should expect completely different investor impacts from those things, but we talk about it all as tech. >> every story is important. companies all have individual issues, but every company you named is at the forefront of the next wave of change or disruption, whatever you want to describe it, as compared to a lot of legacy companies that the issue is how much can we keep of the current business there's no question they can cash in on the wave, often can't, and the question is what valuation, what do you pay for that a classic there, look at the
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difference between tesla and ford ford was trading miss single digits earnings pe this week that's saying the company is basically worthless, going to go out of business. i don't see why tesla is going to put ford out of business. ford can make electric cars too, so the disparity in that, you look at that, say hey, wait a minute, is that fair >> so denise, does tech continue to be the outperformer and the thing leading markets higher going into end of the year, especially after midterm elections, or should investors put money elsewhere, for example, utilities this past month? >> it is interesting what what i look at historically, what's unique about the tech companies is they have one critical driver and that's margins forward looking indicators that i examine from odds perspective suggest that trend of margins is still upward which has constructive outlook for technology what's interesting is that we have seen a signal in the market in the last year where it has
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gotten very narrow from a sector perspective. only three sectors outperform the s&p 500 on a 12 month basis. when that happens, you usually see a quick, sharp expansion of the market to where five or six sectors outperform in the next 6 to 12 months if that's right and if that's the case, technology, the positive risk reward we're talking about still suggests outperformance, but its dominance in terms of outperformance is likely challenged >> denise, we talked to yurien, i don't want to put words in your mouth, but directionally he sees inflation, this ism number, six month low and prices paid up, is that the base case at fidelity >> we don't have a base case at fidelity, one of the great things about working here. we all have different opinions
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debate leads to better investment conclusions i can't comment on his opinions. i can comment on my opinions i look at from an odds perspective any deceleration, second derivative has interestingly higher odds of s&p 500 performance and higher average returns versus deceleration that hasn't historically been something to necessarily be scared of. i think to make the argument of stag-flation, you have to look at the variables are different i'm not seeing that from that perspective. >> henry, less than a week from midterms if history is any indicator, do we get a stock rally and does it matter the results >> one of the stories the gop says now is the reason the stock market is going down is out of fear the democrats are going to
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win back the how the use or sen. if that doesn't happen, you may see a little rally i don't see anything to suggest that's actually what's happening at all i think a lot of economic indicators repeat. will it keep getting better at the rate, the tax hit will wear off, interest rates are going up, there are lots of reasons the stock market is taking a pause. i don't think it is related to the election >> we will find out more tuesday. >> thanks for having me. as we head to break, look at the s&p 500 leaders. redhat and twitter up. more winners and losers coming up first, rick santelli, what are you watching >> the long end of the treasury market has given us many clues on recent firmness in rates. we're going to talk about a floor favorite, the knob spread. meat is it meat is it co back afteare costs,
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i am scott walker. here's what's coming up at the top of the hour. good riddance, october will november jump start the rally again? it is usually a good month for stocks we debate what lies ahead for your money. health care may be the second best sector year to date. one analyst makes a big call on a name you may well own. we have details in the call of the day. and pete najarian has unusual activity in a stock that
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could be about to move big time. all at noon on the half. morgan, see you in a little more than ten minutes away. >> a lot of cliff hangers. looking forward to it, scott. >> there you go. let's get over to cme and rick santelli. >> thank you you know, many issues have been large or loom large in the minds that trade fixed income market and try to handicap how the markets will trade under certain and changing and constant fed policies one of the issues is the yield curve. for the longest time, potential inversions in the curve made many nervous because of implications of that being a signal for warnings ahead, maybe recession ahead, slower growth ahead, and it makes perfect sense. back in the day, on the trading floor back in the '80s and '90s, it wasn't the ten year note that was the stellar fixed income benchmark we all discuss, it was the 30 year bond
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what chang-- but the bond is something to watch one of the favorite spreads on the trading floor is the knob spread, notes over bonds 30 year over ten year note yields before we get into why that's important, look at 30 year bonlbond for october. if you throw up the chart, there's something important. big breakout was one that traded 3.25 when it did, it set a high yield close four year plus, high yield close 3.40 but never retreated and retested or even came close to violating the breakout point at 3.25 lowest yield close since then was 3.31 unlike all other maturities, especially the ten year note, its breakout was 3.11, and it traded below that. why is this important? now go to the bond spread. you look at notes over bonds, it steepened for the month of october from 15 to 25.
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look at the other favorite that many like to look at hardly changed for the month of october. 26 to 28 steven two basis points. the notion of the 30 year being firm, monitoring the knob spread being firm is a good clue. a huge lineup of guests at the deal book conference this
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morning. 20th century chairman in a few minutes. "squawk alley" back in a moment. illumination!
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today we will steal christmas, in style. but let's start by finding some reindeer. we've hit the motherload. oh, hey there. [ screaming ] [ bahh ] [ sigh ] well, santa had eight. he looks like he ate the other seven. the grinch. rated pg. fred? what are you doing? okay.
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i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. sing. welcome back to squawk alley. a market flash, spotify shares down 6.5%. the company's worst day since going public in april. after the company guided to fourth quarter revenue below analysts' expectations
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reported a modest 5% rise in its premium subscribers. 28% jump in monthly active users. the stock moved slower, despite the fact that spotify posted an unexpected profit. though the company did warn it would sacrifice profits for future long-term growth. >> tune in for more dealbook coverage andrew sits down with snap's evan spiegel and google, sundar pichai. people go to lea
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co-executive chairman of 21st century fox, lachlan murdoch joining andrew sorkin this morning cnbc is the exclusive broadcast partner of the dealbook event. >> our employees and colleagues within those businesses. so the journey, to sell such a large part of the business to disney was one that took some time and took some time for us to think about think about where the industry has gone what the challenge is. we saw on the horizon for the
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entertainment part of the business but also about where those assets could sit that would make them more viable and stronger than they were just with us. and so probably say 18 months ago we got a first phone call from a phone company who was interested our stock was certainly undervalued. you could see it on every spreadsheet. >> what company in. >> i think it's been reported that it was verizon. >> verizon calls you. >> verizon calls us and said it would be interested in an acquisition. >> it was in the midst of the time warner sale to at&t when we thought about at&t owning time warner we didn't think time warner would be a better-run media company they weren't going to be making better creative decisions. because they were owned by a phone company. so it was easy to say we didn't understand the strategic fit with verizon we didn't see our assets being
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stronger but then a few months later when bob eiger called, we had this in our mind works there be a time when we would sell when bob eiger called, we saw this made a great deal of strategic sense. so my mother and i, my father, we sat down, went to my father's office and we had a long conversation about it. we could see the entertainment assets, fx, businesses like national geographic, obviously our movie studio, movies coming out like "avatar," these fit in disney's wheel house and created a lot more value for shareholders. >> your dad calls you in what was your initial reaction what was james'? >> we knew about the conversation and we talk every day. we're all very transparent and open with each other >> and i think we all agree when we saw on paper that the assets that we would sell to disney would do incredibly well >> was there any part of you personally that thought you know, i may not get to run this big empire in the future
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>> your first thought as shareholders can we get our business, our value. to the point where disney can get it within a couple of years, right? in the same timeframe as disney, we were honest with ourselves and we said no, we believe in the assets, we believe in the growth under disney ownership they were stronger and made more strategic sense while under our ownership. disney couldn't buy the tv network. fox sports, the national sports networks and so we realized that having a lot of business based on live news and live sports obviously with a lot of entertainment as well you know an excellent position, stand-alone business. >> did you have any idea when you first sold, when the deal was first consummated, if you will with disney that there would be a bidding war for these assets from comcast late centre one of the most remarkable things that took place to the benefit of your shareholders and family

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