Transcripts For CNBC Squawk On The Street 20171013

Carl quintanilla with jim cramer a solid open as we watch more good Bank Earnings and consumer inflation that is a touch cool 10year core cpi runs 1. 7 year on year. Wells fargo with earnings, does it point to a strong season of corporate results . Tech policy head winds, the fang stocks are set to open higher. Amazon and alphabet above the 1,000 mark and 21st century fox down in the premarket following the drag from comcast and direct v owner at t bank of america better than expected as improved lending activity and higher rates offset weaker trading revenue and wells beats on the bottom line but revenues miss and that stock is lower as we watch efficiency ratios. Wfc, wells does a pretty good job of not talking about the issues that beset wells fargo. I will say in their defense, there was not a decline in average deposits, up 4 . People are not fleeing wells fargo. Bank of america has become the bank that i always thought it would be, the consistent bank where you can put a price to earnings i was been waiting for 2 in earnings power i see it happening if we get four rate hikes because thats adds more than 3 billion to it this is a stock the banks want to go down right now because they ran up give me a break. People will circle back to these. Bank of america was really supexsu superb i felt citi was good because they had a credit card issue but i thought it was a little bit worse than what they said not that long ago. They are making money on it. Jp morgan was terrific bank of america is best in show but the problem is people just say, they will not be saying eh when we get fed rate hikes because you can take numbers up. If you want to sell a bank possible 2 in earnings power and should easily sell with a 17 multiple, go ahead and sell it you dont know what youre doing. This bank by the way is technologically superior to all other banks. I would go so far to say its the millennial bank. Bank of america because their handheld, Cell Phone Technology is great and people love it and they have a venmo of their own the transaction numbers on the mobile are rather extraordinary. Very, very good release they put out which shows how much ahead they are of everybody else i really like the bank of america. It is the best profit in six years, loans up six, not quite the seven out of jpm and trading was a slight beat down 15. What i like is there is i dont have to worry about the socalled fix, fixed income. What Brian Moynahan has done, what i regard as responsible bank and responsible lending responsible in terms of what its doing societal. This i mean, i know weve been trying to figure out what the millennials really want. They want their cell phone to be able to make really easy banking. This is what they want bank of america is giving them what they want i think it does matter the numbers at bank of america are smooth i mean, its just a smooth quarter, revenue rose 6 the Global Wealth management business is pristine and fabulous, total client balance is 2. 7 trillion. And loans increased 8 for Global Wealth. They have a Global Wealth power house. Yes, these stocks are going to go down because there is something going on where people say they are up too much, but they will circle back because when you get that fed rate hike in december, i can raise numbers for everyone. The cfo did say were not seeing consumer weakness. Not at all. You mentioned the credit card issue at citi. Some losses are rising faster than expected and chargeoffs approaching 5. When does that become a worry . I think what city does was basically say, look, well take that charge jooff in order to me the incredible money off of cards. They decided weve got to be the credit card company, costco business helped them, visa and i go back to bank of america, if you look at the release, what you see is that not forming assets declined 1. 9 billion, driven by credit quality improving loan sales there are fabulous numbers in their deck that make me feel like bank of america has become this sleep at night bank theyve really figure out how to give you consistent earnings power without the up or down of trading. So bank of america is the one thats going to get a higher multiple right now i really want to caution people. Stop looking at the stocks going down and therefore thinking the companies are doing badly. Start thinking that the stocks ran a great deal, theres profit taking and people will circle back to them. At wells, auto originations and mortgage originations are not going to the moon. They want to cut back from auto because of chargeoffs i know wells stock will be down but there could have been an exodus of customers from wells because of what they did and i will say emphatically that did not occur. They are sticking this year. If you have an account with wells you still have an account with wells is it growing way i wanted no. There might new customers that ended up nothing opening an account. Exactly but the Customer Account my hat is off to them people like to bank at wells thats why whats so tragic, they didnt need to cross sell but they wanted the stock price higher but when i look at this, i say to myself, guys, why did you do it why did someone let this happen . Holy cow why did they let that carry run roughshod over everybody because geez, the people loved wells fargo. I loved wells fargo. I was i had a wells fargo client when i met with john he did try but that was his job. They didnt need to do it. Thats really its kind of like in football, you know, you didnt need to hit the quarterback. You were doing well. You just got and theres the flag. Theres the flag. Im throwing you know, wells had unnecessary roughness to its clients and yet people are still going to the stadium. Jim, lets switch to fang this morning tech stocks are going to open higher you have amazon and alphabet back above the 1,000 and netflix gets an upbeat number from goldman about subscriber numbers despite the head winds facing big tech tech giants seen as saviors viewed as threats on page one and another one, in the review section, Silicon Valley is not your friend. Why are prices violating the overall social narrative here . I think that in the end when you speak to the forward most forward ceos when it comes to advertising and im going to use ben adoor who is a brilliant man at clorox. You have to be at the point of purchase the point of purchase for millennial is google and its going to be amazon so what what hes saying the point of purchase is no longer at walgreens it got advertised but if you really want the person who is going to buy something right then, you have know choice its facebook and its going to be amazon. And the senators, they can do whatever they want but the fact is when you go to the what would virginia wolf do blog that my wife starts every day, they have an oil of olay ad because that where it should be i think people dont understand unless youre like thats adults snap has that market for teenagers but they dont have any money. I mean, if you want to know where the money instagram you can rebrand yourself and facebook because you have these group blogs and the ads are targtded to the group. Amazon, you always how the hell did they know i was going to the thing amazon has tremendous Artificial Intelligence did the russians maybe the russians, did they infiltrate these things i just have to tell you that you can have all of the hearings you want in the end, what does it have to say with the price earnings ratio of alphabet . Speaking of netflix by the way, this week weve gotten price target hikes from goldman, jpm and goldman goes to 235. Citi did it too they want to be in ahead of the quarter, much faster growth than expected everybody likes the price increase and the fact that the price increase is going to stick. Contrast that with costco where on the Conference Call they did say the millennials do not necessarily renew at the same rate the 52yearold cohort does i like the Company Costco and shop there although my wife took the tie and threw it out when i got home the thing that really matters is that no one is going to cancel netflix because they raise the price. They are not they are not going to cancel amazon prime and spotify i got my apple bill i didnt click on it. Hell with it. Just pay whatever nfl. Com terms of service. I agree with that what am i going to do . I take so many pictures, i need that cloud thing they should charge me more. We should mention roy price has been suspended after allegations much harassment as hollywood is in true turmoil now. That was that news important. You know, the man in the high castle was the film that put them on the map as the place to be able to be a binger, that was a binge programming, usually people who arent that key theres some people who really have not distinguished themselves of late in when it comes to being a human being. Well watch what all that means. Switching from fang to old media. We talked about the downgrades yesterday, at t filing and pressure on our own Parent Company and fox under additional pressure. Look, the att was bad the cord cut i have nothing to say other than the fact that you know, i know probably people say im going to say genx this time but there are two tracks of behavior the behavior that says ive got a smart tv as more smart tvs are sold, those people are not necessarily signing up and then theres the old School Behavior and that again, really i dont want to harp too much back to the costco call but their hands were forced. 52yearold is doing Something Different from the 26yearold and we all got to start thinking about the 26yearold and where that person what that person does nice note today about gaming from piper they love gaming i was with pat doyle last night dominos i dont know why they sell the stock down they like pizza, they like beer. You know, weird al yank vick when he said no more i was say grapefruit diet, no more pizza and beer he was completely wrong. Couldnt have been more wrong about the millennials. When we come back well talk about fox and why shares are taking a hit and sara ooisens exclusive with Stanley Fischer lets look at the premarket. More squawk on the street continuefr n ia nu s omycn mite say carl, we have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh and i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. 21st century fox Class B Shares are down in the premarket. Ctw advising several union funds invested in fox is calling on the company so overhaul the board and the work culture in wake of the scandals at fox news its combined with the overall weakness today. When i look at this theres a couple of issues, one is with the audit company. Should it have been was this a material aspect now, of course the investigation was down by paul weiss and i would have said that paul weiss would have said absolutely if its material, they would have told them im not so sure about that one and a pretty serious guy, hea heavyweight being the chairman of the Boards Nominating Corporate Governance Committee it was only a matter of time before someone said what is going on with this board that they let this happen they talk about roderick edding eddington, saying he failed in risk oversight responsibilities and that is the type of thing the sec doesnt like to see. I dont know if they will take the cue for this but this isnt going to go away fast. In the end, we would maybe overlook it if people were tuning in more i dont know i spent a lot of time thinking about this because i was watching tony romo doing an excellent job. Does seem to know everything its going to happen beforehand. I feel like people have too many other things to do. Then what then watch tv. Then watch tv in general. They have a box and would rather do call of duty. They have a fantastic tablet and would rather binge because the quality is so good and football is one particular thing. A lot of people watch it in places you cant really record get a sense of it. Football is on every night. I watched the game last night, congratulations by the way. Thank you. On an ipad. Thats what i mean. I watched with my fantasy and know theres a product coming out you can watch fantasy at the same time. But there is just an over theres an overload of what we do and i think that football, the play is sometimes not as good, cba seems to have hurt them look, i think nobody wants to get hurt anymore, which is good. And the product is on too often but its still a great place dominos told me last night they still love to advertise still brings in the customers. But i do i have to say theres just too many alternatives and too many fabulous devices that make it so that you tim cook, i know i have to say tim cook invented things that made it so that we have changed our what we do the form factor is so good we took the tv out take the tv out of the bedroom. Tv out of the living room. And i had to fight to get my tv hooked up because my kids said, why . Why hook it up, dad . Because i work for comcast. The battle moved on. Yeah, it did. One of the things thats going to happen. Dominos is going to offer a alexa, and get me a sixpack. Facebook launching in a food ordering business. I see grubhub down and i think these companies are i think that the newspapers may think that they are our enemy, but i think most people feel they are our friends they are our friend because that i get im very lucky and mosquito well known figure people take their picture with me and what do they do they post it its for instagram i held an event for the street. Com where in bar san miguel, nobody wanted to talk me, just wanted a picture. My daughter is rebranding herself across the country with this tent. Its not the four seasons. Its tenting tonight people use it to brand themselves we want to be someone else. Its funny, i was talking to somebody yesterday who spoke to a College Class and asked the students if you hear in the hallway theres been some monumentous piece of news, where do you go to first instagram for a lot of kids, it was instagram. Absolutely. And last this morning, i have a picture of fletcher cox, such a beast last night with me and i couldnt put my arm around him because hes too big do i put it or not post it by the time i this is what people think about it is incredible they want their own they create their own entertainment and then alphabet makes money off of it and Facebook Twitter hasnt been able to monetize like i like i always ask, what do are you doing . Shes on facebook because shes older and kids are all on instagram and looking at ads and ordering things because thats the point. Where they are ready to order. I mean, i didnt have my binoculars this week, cant find them i go home and said zis has good binoculars, go on amazon, six pairs, anything involving binoculars, anything, i mean how smart are they im like, i like that. Hes a bird watcher. Theres so many whats target jc sears, one of the things sears did, home depot when stock went down because amazon tired with sears, you have to tie up with places people go to they dont go to sears. No doubt. Sears is if you were to tell someone you were going to sears, they would think they are in a wayback machine. Can i get in the wayback machine . Its were going to get cramers mad dash in a minute and count resqwkn the opening bell mo ua othe street in a minute stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. At ally, were doing Digital Financial services right. But if thats not enough, we have more than 8,000 allys looking out for one thing, you. Call in the next ten minutes to save on. And if thats not enough, well look after your every dollar. Put down the phone. And if thats not enough, well look after your every cent. Grab your wallet. Access denied. And if thats still not enough to help you save. Ooo i need these well just bring out the snowplow. You dont need those well do anything, seriously anything to help our customers. Thanks. Ally. Do it right. Your kids go to college and you start trading. Yeah, 5 years already. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. Today 1775, Continental Congress rekrits the Continental Navy and happy 242 years. Project power, theres nothing like the navy. You have to respect everyone in the navy theres so many people at Goldman Sachs would worked in the navy and boy did they ever know what they are doing. Be looking forward to watching them ring the bell in a few moments. Lets get cramers mad dash. Theres a barclays piece, i like the title of it and refer to it, mary to elon, give me my market cap back. So far ahead of everybody including ford they downgraded ford and saying they are well behind gm, go early and big strategy and offers optionalty and option value. This is i love all of the different words they are using gm, more of an evolving mammal than a dying dinosaur. So the valuation should be up. Gm stock has been rerated and rerated but a lot of it has to do with the fact that people think gm has an edge on tesla. And that maybe we ought to come back to earth on tesla tesla is a cold stock. Were still on whenever youre with anybody, theres a tesla. Enough already but this piece does say that this move it justifies this move and does justify how poorly ford stock is. Ford really got left behind and i can understand that there is a world of difference between ford its amazing how quickly that story changed. Well get the opening bell in a few moments. Ngowa dot ay. Question. What is an answer dot ay. And how can you measure the value of one . Today trusted answers from trusted sources are rare and precious commodities. Theyre out there but finding them on your own has never been harder. Its why at Thomson Reuters we provide you with the intelligence, technology, and Human Expertise you need to find trusted answers. The answer company. Thomson reuters. Traders theyre always looking for advantages. The smart ones look to fidelity to find them. We give you research and datavisualization tools to help identify potential opportunities. So, you can do it this way. Or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity for just 4. 95 per online u. S. Equity trade. Fidelity. Open an account today. Open an account today. Ive asked chase sapphire reserve cardmembers to find my next vacation. Uganda, what are you up to . Thats a real silverback gorilla. Im freaking out 3x points on travel and restaurants. Sapphire reserve, from chase. Make more of whats yours. Something we all think about as we head into retirement. Its why Brighthouse Financial is committed to help protect what youve 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. So you can head into retirement with confidence. Talk with your advisor about shield annuities from Brighthouse Financial established by metlife. Youre watching cnbc squawk on the street. The opening bell in 60 seconds the president has already made moves on Affordable Care act the wildfires the deadliest in californias history gpi, a slight miss there was some talk whether ppi set us up for a turn. I wonder if iran decertification would impact the boeing order it haub such a favorite. A very positive note, a defense stock note deutsche bank, boeing. Boeing best stock in the dow that could put the kibosh not the money side, dont mean to impact well see what the president says later on today. Theres the opening bell at the big board. It is the United States navy, celebrating its 242nd birthday at the nasdaq celebrating its ipo ortho pediatrics corp, featuring products for children. The banks will lead the charge again here, jim. And pnc will report people love that. Its a fang day. I know that it must really wrangle people that every day the press is so bad on facebook on alphabet, what they know about you. But thats Just Congress speaking its a lot easier to trash these companies than it is to pass legislation. And i think that youre really fighting history if you want to fight these guys these are the smartest guys and best people that we have in the world. They work at these places. You are whenever you meet someone who works at these firms, they are always kind of blown away, youre saying, okay, look, they have the cream of the crop they really have it. And theyve developed products like this Facebook Order and made it so that weve changed our lives. Yes, do they are they our foe . Thats the media i didnt say fake media because i work for these institutions. We sort of do heres page one of the New York Times, changing the world but not quite the way they imagined, arguing that the companies are under pressure for creating problems rather than solving them as weve tended to think about them. Well, i think that theyve grown fast everybody has to be more responsible than they are. It really we have bank of america emphasized over and over again responsible lending. All of these Companies Need a responsibility officer i know that sounds like that should be the ceo but someone has to be challenging them in the board room, saying are we aware that this is being misused . We are we aware were doing this . Their overall power is not unlike what we saw with microsoft at the turn of the century. They were too powerful and it got to the Justice Department which you never want i think that google is very smart. They start the billion dollar Job Initiative those are the things that you do to ward off the regulators justice do that. Dont just go to stan ford and hire the top 10 hire the rest of us. Thats what they have to do. They have to be more responsible about trying to go and getting people to get jobs who would not normally amazon does it they put you may not want to work pore amazon, but they create a of jobs but also wipe out a lot of jobs but create them. Health care will take it on the chin as the white house says they will not make the subsidy payments on october 18th we had the executive orders yesterday that loosen the rules on plans that dont comply. Done such a great job with current system, the system that we had before this executive order, really figuring out how to get paid. This was breath taking i think that there are a lot of people who felt this somehow had to be congressional. We didnt realize might still be, we dont know. But the fact is all of the companies were seeing going down are companies that had benefited from the regime and from not being able to repeal and replace and there are a lot of faves in that group, United Health big dow stock, i liked it forever and ultimately what you have to say to yourself is that the president will not do what he says and thats a very rough call because this president is very emphatic and he did it so fast i mean, this is what we all feared if we own these stocks and it happened. It just happened i want to see the plans the devil is not in the details this time just the president i think a lot of people said, geez, i thought that involved a 535 other people, but no it was unilateral. And it was really kind of took your breath away. Well keep our eye on health care names hp which had guidance last night, up almost 5 . I think that that was a remarkable quarter they are really coming very, very strongly for 3 d, we though it was a hobbiest thing but they are doing 3d, amazing way to frankly to make a lot of things, whether it be tapestry, i dont mean coach Metal Production i think that was something by the way that ar conic was doing when clause kleinfeld was there. This is a real initiative. Meanwhile, dionne is doing a remarkable job so remarkable, i think ill put him on mad money tonight. I have a feeling you will. I like that company very much when it was at 1214, i had a crisis in confidenceand beat each other up. Listen, jim, were doing all of the things you want, were returning cash flow and buying back stock and have a great dividend and won me over and im glad they did. Because boy they have exciting products. Jim, netflix cracks 200 ahead of earnings on monday. This goldman price target boost to 235. Can you believe when they did that announcement of the price increase, it just changed the whole story because the big bear case was that it wasnt right that Reed Hastings bragged about enormous negative cash flow is success. Because he was almost playing a little game with us. But netflix is netflix should have been bought by somebody else when they had a chance just like spotify, its too late. The guys that run spotify are from netflix. Is that so . Yeah. Blockbuster had a chance to buy a big chunk a long time ago. Netflix, what can i say, they are sticky you get the bill thats just what people its integrated into society and thats a remarkable thing that somebody got integrated that fast, versus when we used to do the disks in the mail and our queue. This is a commonalty, im on episode nine, will not spoil anything of. Of narcos 3 im thinking this program, is there a country this program would not be loved and it certainly would be much more loved in spanish kupcountr because the show is spanish. I hated movies with title. This is almost all titles except for pena a cross between Burt Reynolds and david favor pena, i wants to be pena and Stranger Things on october 27th. Is that going to be great watch with your family is there anything more fun to watch with your family than Stranger Things. Im watching different football and this is us, all of these cbs, csi summit, whatever, but in the end, what do i fight over with my wife . Vietnam, which is not its pbs or do we watch do we finish narcos were not talking about the other programs and were doing these in part because we feel young. We almost feel like millennials. Its good. Thats priceless is what it is. We feel like millennials. They are so great, to be a millennial again. Jim, you just tweeted a picture of nvidia. Its time i had to wake up nvidia, nvidia was sleeping. Where are we now . On nvidia and bit coin today. Nvidia i think will end up finishing down because they keep trying to push a lot of sellers at the 192 level but the note was very good 250 price target data center and how they have a superior Data Center Product which is really true the data centers are about heat. Thats it. I mean you go in these things they are huge heat generators and electric generators and the new Data Center Products use Much Less Energy they are going to win. But it is rather amazing that everybody is tripping over themselves including my dog to have a price increase. Wells now down 4 , jim. You know, theres theres just something about when you commit fraud that its just not a winner. Is it that . Is this a cost issue its a compliance issue they got away they didnt get in trouble before. They have a lot of explaining to do and the stock was going up with the rest of the stocks, got a discount and i my Charitable Trust manager get out of this thing. Didnt get out of ge i look at ge every day and as i said never felt dumber is what you said earlier this week. Than the fifth grade where my father said basically said i was a disgrace. Ge is close to 23 and is now its waiting on the dow is. 7, weighting on the dow now really, if nvidia were in the dow, it would be bigger . Almost assuredly, yes well, ive got to get a rescue dog and just that is ge im going to save a dog this weekend. Im going to go right to the shelter and get some mangy old dog and fix it up and give it some shots jim, we mentioned gm earlier this morning tesla is recalling these 11,000 model x suvs. Only going to be up two. Its not down. A recall of all of their cars might drive the stock up to 400. It has nothing to do with anything its elon musk, youre buying musk let me buy some musk musk used to be a mens cologne. The stock has nothing to do with the company. It has to do with love its shake peer yan. Arent that funny but they end well this ends well every day. But the nature of it has never really youre not willing to short that . No, its a fabulous cult. It is the greatest cult stock in history frankly. Here youve got the chevy electric car and its like, are you kidding me bmw has an electric car that i rode in and im saying, wow, if bmw had a stock, maybe it could be like tesla. Wow. I mean its a weird day, transports doing well again they make me feel so warm and fuzzy but some stocks just have a predie leks to go down retail is not down yet whats going on . Its being superseded today clearly by health care, unh is the worst stock. This was a great company. This was breath taking what the president did, he changed everything i would like to see what the coverage is but this was a stroke of you can say brilliance or you know, he just took it by the horns. You know who knows a lot about this is Bertha Coombs and well go to her no, berth that is at the floor hey, bertha. Well get to health care in a minu minute lets start off with financials which have been one of the laggards this week bank of america, pnc, wells farg gorks all reporting this morning overall banks earnings have been solid thanks to stronger lending and higher Interest Rates and wells a big drag, that mixed quarter and all of the issues that jim has outlined. Banks are up 6 over the last month but seeing profit taking today. Take a look for the week financials are down 1 for the week dragged down by insurers in particular who are facing big losses between the hurricanes and fires in california. The hurricanes were actually a bright spot a Silver Lining when it came to retail sales, they rose sharply in september boosted by Home Improvement spending and higher gas prices even as we saw a fifth straight month of decline when it came to electronic sales weve seen retail softness overall this week. The worst performing sector out there down about 4 for the week, among the big losers j. C. Penney, j jill, set to open at all time lows and youre seeing them bounce just a bit after hitting those overall could be some folks thinking maybe were bottoming a little bit there and theyve been beaten up enough then i would like to talk about the health care. Specifically take a look at the players that are in the obamacare market United Health, pretty much out of there the Trump Administration announcing its going to immediately stop billions of dollars in those subsidies thats going to hit the anthems still in there and are planning to be in there for next year its going to hit them short term in the Fourth Quarter with those stopping well likely see a number of lawsuits weve already heard from the attorney general of california, the attorney general of new york saying they will be soon to stop this and get an injunction against the administration but theyve already priced it in as far as the insurers that are locked in to be on the exchanges for 2018 the issue is how all of these changes are going to impact their willingness to be on the exchanges when it comes to 2019 and to be in the individual market thats a longer term impact. And for hospitals, the impact overall is even more negative according to analysts because youre talking about not just the csrs ending, those are the subsidies but fact well likely see a lot less enrollment because the Trump Administration has cut back when it comes to the time for enrollment and support of enrollment, you know, advertising and other support efforts. Carl really quickly, bertha, would you describe this the president s moves over the last 24 hours as taking a sledge hammer to the aca or more of a scalpel . Its a scalpel but its going to cut deep longer term as you continue to have uncertainty as to how this is all going to wind and where the impact is going to be its going to take months for that eo to go into effect but were 20 days ahead of open enrollment it starts november 1st how are people going to think about whether they want to sign up for plans if they think they are not going to be able to pay them down the line yeah. Bertha, thanks for that insight. Its a tough story to get your arms around sometimes. Boy is it ever. And the idea of trying to model what we thought a lot of companies we modeled senteen, they played this so well and now i dont know these stocks until you find out they are going to sell the banks because theyve decided that the banks have peaked, which i think is wrong they are going to sell the health cares and thats going to end up being wrong too but we dont know which ones will be in the new world. Maybe all of this is posturing and Congress Says you cant do it but maybe someone takes it to the supreme court. I dont know its radical. Maybe hes serious when he talks about reaching across the aisle with schumer on a broader fix. It is radical and the most radical thing he has done as president. I think that people are really kind of blindsided by this its kind of miraculous. I dont know anyone i dont know anyone anyone who thought this was going to happen not a soul and thats really important. I dont know when it happened i think people were like, no, thats not happening these stocks are going to be down much more you cant model it, guys its not like the threat to cut off subsidies wasnt there that had been talked about but you wake up and he made this statement and its like the stocks didnt react at all it was like nothing had happened and then you come in today and people are like putting pencil to paper, i dont know if i can be in these stocks and what it means. I think hell come up with a way to be able to deal with this and that stock goes down ten points, you want to buy it all of the money its rather amazing, every time you have a group that people flee from, they go back to fang its almost like they used to go back to General Mills they used to go back to kellogg and cocacola. They dont go back to those anymore. They go although p g is having a good day relatively speaking. P g, i know mr. Peltz feels its really incredible difficult to unseat because of all of the different 401 k tieups and stuff, but they are going to procter, very true but going to netflix as if netflix recommendation rca those who studied 1928 to 1929, it was the Radio Corporation of america that led us. That was our bull market stock and heres rca, netflix is rca and Reid Hastings is general sarnoff. Lets get to rick santelli. What a difference one number can make listen, were talking the difference between a 10year note, 2. 33 before the inflation data and 2. 38 afterwards keep in mind last week we failed to get closer to unchange on the air and failed to get above 2. 40 on a closing basis when we look where we settle for 2015, 2. 27 look at interday of twos, you can see what happened at 8 30 eastern. There were aspects of cpi that were a little hot but the x food and energy and post hurricanes and all of the issues that put question marks in our minds with yesterdays cpi didnt materialize and the market was brisk. Look at the interday of tens were up on day before that number now were down four on day down eight on the week look at the one week chart of 10s. What did really happen here with regard to the rest of the marketplace . 10s meinus 2s. If the inflation data in and of itself was more of an economic indicator, i would think you would see the moment on tens but the movement on the twos was just as aggressive the curve flattened and that flattening means theres more fed focus on this than economic focus. There is a bit of a difference on that. Look at a one week of boons, this is also fascinating they reacted at the bottom of important range and separation of tens and boons is 1. 90. One week dollar, dollar took it hard dollar is technically starting to soften up even more we want to keep an eye on all that is europe, even indirect influences like brexit hey, at 11 30 eastern you want to be tuning in. Im going to be swimming with the fish not in a godfather kind of way mr. Wonderful, kevin oleary, is going to join me on the floor. Well have a little shark talk make sure you tune in to see it. Jim and carl, back to you. All right rick, thank you very much. When we return, Stanley Fisher wrapping up his tenure as vice chairman of the fed. Sara eisen will have that interview later on this morning. Dow is up 36 points. Unh is the big laggard on the 30 were back in a minute is the monolithic view of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. When there are areas people are fleeing, in this case, some retail and banking, they go up to fang. We have them across the board. Amazon and google back in the back in a minute throughout my career, ive been fortunate enough to travel to many interesting places. Ive always wanted to create those experiences for others. With my advisors help along the way, its finally my turn to be the host. When you have the right financial advisor, life can be brilliant. Ameriprise time for cramer and stop trading. Watch pooej today. I would be remiss if i didnt talk about the california regulators and asking them to please preserve evidence whether they were involved in fires or not thats a very important story. California utilities very powerful be aware of that i dont know where that bottom is hp tonight . Dion weisler is one of the most exciting executives talked mead into buying this pc, by the way he is he promised me two years ago he would commercialize 3d printing. I told him i would believe it when i see it. Im going to believe it because i see it hes a great guy hes fun you should watch him hes Richard Manson but more substantive. Okay. Jim, well see you tonight mad money, 6 00 p. M. When we come back, stan fisher, last day on the job. Sara has the exit interview. X o. Get 4 unlimited lines for just 40 bucks each. Taxes and fees included. And now netflix included. So go ahead. Binge on us. Another reason why tmobile is americas best unlimited network. If they knew just howers rich they were. Ed the average American Home value has increased 40,000 over the last 5 years. But many dont know you can access that money without refinancing or selling your home. 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Its important to learn all you can. To help protect yourself from a stroke. Talk to your doctor about xarelto®. Theres more to know™. Welcome back to squawk on the street. We have breaking news. Our preliminary read, yes, our preliminary read for october for university of michigan, were expecting the numbers. Holy mackerel. Expecting 95 101. 1. 101. 1. This is really a huge number because when you start getting into triple digits, youre going back in time a long time im going to have to go back to the very beginning of my database here, it looks like last time we had a triple digit handle on university of michigan was in the year 2000 november when it was 107. 6. This is really, really big time. Now, lets look at one year inflation, shall we . Considering we did not see the hot, hot, hot cpi following a hot ppi. 2. 3 on oneyear outlook. 2. 4 on the five to tenyear outlook. Both of those are less as a matter of fact, on the oneyear, that was 2. 7 on our final read last month. Now, 2. 3 and the 2. 5 to 2. 4 thats really important. Remember, this is preliminary. It can change. But it is a monster of a number. Carl, back to you. Unbelievable, rick. Thank you very much for that rick santelli. Good friday morning. Welcome back to squawk on the street. I have mike of the New York Stock Exchange david is off today sara eisen is with us today. A big interview from sara coming up shortly in the meantime, markets trying to hang in there some pain in insurers, although fang once again having a good day. Our road map today starts with more big banks report bank of america and wells fargo opening their books this morning. Well bring you the numbers and analysis straight ahead. New details coming to light the president is expected to address the Iran Nuclear Deal today. Plus, bitcoin surging to now record high. Surpassing two big banks in market value well tell you which ones and why straight ahead lets get to sara at the imf fall meetings on a very busy week hey, sara. Good morning, carl. One major hot button topic Central Bank Next steps. Were at an Inflection Point yesterday, we talked about ra rare for the first time in years, but with that, it means its time for Central Banks to pick up efforts to get out of emergency crisis mode policy, a decade since the financial crisis that could be Risky Business ecp president saying here in washington his qe asset purchases will continue until inflation improves, and Interest Rates will remain super low. It raises questions about whether theyre missing a moment in this recovery to tighten policy in the u. S. , were about to go down the experiment of shrinking the Balance Sheet while raising Interest Rates amid a recovery and this debate about low inflation. We saw that in the numbers this morning. So besides the policy path, theres also this question out there as to who will be pulling the trigger. Janet yellens term in february. Everybody is buzzing about who President Trump might pick former treasury secretary Larry Summers shared his pick with us for the first time listen i think its not a good idea to make a change unless you have a compelling reason. And theres certainly no compelling reason not to reappoint janet yellen she and i have had some differences on policy, but overall, i think shes done an excellent job. Shes been a consistent, steady leader of the fed, who is trusted and will be a safe pair of hands if some kind of financial crisis takes place unclear whether the Trump Administration will agree. Summers doesnt usually agree with the Trump Administration. But that was his first time explicitly backing yellen. We have the right guest on this topic, leadership of the Federal Reserve, what comes next in this wave of Global Central Bank policy youll hear from the vice chairman of the Federal Reserve, Stanley Fischer, a key yellen ally stepping down for personal reasons this weekend speaking to us here in this final interview on the Federal Reserve. That will be later this hour that question of where we are in this Economic Cycle and what it means for Central Banks is front and center at these meetings we cant wait for that, sara. Well come back to you for that. Sara eisen at the imf fall meeting. Big banks, two more opening their books. Bank of america and wells farco had earnings we have been listening in, and the wells call is just now getting under way. Lets start with wells fargo siz its the big mover the efficiency ratio remained elevated at 61 . Lower is better for that number, and it was a rise, more due to a revenue miss without the associated fall in expenses this quarter rather than an outright spike in costs the number higher than they would want the bank also took a onetime litigation expense for mortgage regulatory investigations of 1 billion. The timing of this taking some by surprise. It feels like an anticipation of settling with the doj, which they havent done yet, and an example of the ceo trying to tighten up issues. Bapg of america results were solid across the board their expenses were in fact the lowest they have been since Merrill Lynch was acquired eight years ago. The important 2018 53 billion total expense target was reiterated while shells shares fell 1. 4 yesterday in light of elevated credit costs for jp morgan and citi, bacs credit cards exceeded expectations. On cards, while they did build reserves, they did so by less, 200 million but this is a trend that will important to watch in coming quarters for the sector as a hole credit for wells fargo was also very good. Back to bank of america. Amazing stats for their Digital Payment solution zel they processed 4 billion in payments this quarter, up 68 year on year which is roughly 50 more this quarter than venmo finally, on the earnings call, the thing that had been weighing on bank of americas share price was comments on deposit pricing. Not getting the boosted margins from rate hikes in june as they expected and having to pay out for deposits in the last five minutes, bank of america has jumped about a percent and a half but the wells fargo call starts in just about an hour. The curse of live television. Hard to listen to the call when youre telling our viewers well come back to you for more on the banks, lets bring in david long, david george, david long, you had an underperform on wells on some expected headline risk is the punishing today in line with your expectation . Absolutely. And thanks for having me on your show looking at wells numbers todays, the Net Interest Margin came in lower than expected. Loan growth and deposit growth were worse than expected, and all that leads to is the outlook for earnings as likely to be negative here, so theres, i think we have a negative bias on the outlook for earnings per share for wells after the quarter. I think thats going to continue to keep pressure on the stock right now. On the three legs of the stool here, when youre looking at rates, costs, loan growth, is cost a true concern given what the efficiency ratio told us absolutely. And wells actually on the operating expense number did not have a bad quarter when you exclude the mortgage charge, but the revenue side of the equation remains weak and below expectation. You look at their peers, jp morgan, citi, theyre growing revenue year after year. Wells is not they were growing revenue, and in order to get the efficiency ratio to move higher, you need to see the revenue side move higher david george, give us your assessment of b of a right here. It seems one of the big four that is actually bucked the trend on the stock selling off immediately upon the report of the earnings yeah, i had to jump off the call, mike, to talk to you guys. I wasnt sure if there was anything that brian may have said, but b of a had a good quarter across the board, as you mentioned. Loan growth was good, credit was good expenses are well behaved and they continue to do a good job returning capital to shareholders the b of a story remains intact and the stocks reflecting it this morning you say the story remains intact i guess the question a lot of Bank Investors might be asking right here is it seems like at these levels with the stocks having had this run, a few things have to go right. You have to have pretty good confidence in the Economic Cycle, credit is not going to get too bad and rates are going to help you out at some point. Do you see the ingredients for much of another leg higher for this group, for the ones you cover, or are we at kind of wheree should be with these stocks we really dont see a lot of upside for the banks at all. And its really a function of the fact, first theyre expensive. Second, the yield curve is flattening third, credit cannot get any better fourth, loan Growth Continues to slow so were of the view that the banks are pretty close to peak earnings and find the risk reward in the group to be pretty unattractive here. David long, can you put into some perspective for our viewers here what credit losses are really doing, and specifically at some of these private label cards, the comments we heard out of citi . Absolutely. So credit costs remain very good, and we host a chief credit officer symposium back in may, and all indications there was that credit would be very good for the rest of this year. Specifically on the card side, look, you know, weve had such good credit costs or low credit costs in credit kartds for so long, theres generally some normalization that has to happen dwling thats what were seeing. As long as the employment rate remains relatively low, more broadly, the expenses for losses and credit cards should be pretty manageable. David george, i guess you go along with that . This is more of a reversion to the mean than any, i guess, dangerous sign that were heading into some sort of period where Credit Histories are tainted . Yeah, i think thats right. I think that credit, theres no obvious signs of any excesses from a lending perspective if you think about the degree of regulation weve had post crisis, lending standards have been pretty conservative i think david is right i think were talkingabout a normalization in credit more than anything else unfortunately, a normalization is going to have an earnings impact, and that is something we dont think is really reflected in consensus estimates for many of these companies here. Well, we got a few of the big names out of the way this week of course, more to come as the earning season continues david long, david george, thanks so much. Thank you new details emerging this morning on the president s plan on the Iran Nuclear Deal aman joins us from outside the white house with more. Thats exact low right. Were going to hear from the president later on today, and were also going to hear from Senior Administration officials, but for now, the New York Times and other outlets are reporting some elements of what the president has decided here in terms of the decision thats been long awaited, whether he would certify or decertify the iran deal. According to the New York Times, the president is not going to certify the deal later on today thats going to pus the decision on new sanctions to congress remember, under the existing law, the president has to certify every 90 days whether iran is complying with this deal or not if not, it goes to congress and they can decide to impose new sanctions and get out of the iran deal. But the Trump Administration is reportedly not going to push for the United States to get out of the iran deal altogether instead, theyll ask congress to establish trigger points for reimposing sanctions at some point in the future, but not right now. So the idea is, the president can decertify this deal but not actually get out of the deal and keep some of the benefits to the american side, including the ability to go over and inspect some of irans facilities and the like, which the United States very much wants to keep so meanwhile, thats provoking some reaction from around the world, as you might expect, from the iranian side, were already hearing some rhetoric this morning. Senior iranian commander saying we are not a warmongering country, but any military action against iran will be regretted trumps threats against iran will damage america. We have buried many, like trump, and know how to fight against america. Remember, the iranians there talking about possible military action against iran. Thats not at all what the president is contemplating here. Simply talking about decertifying the russians have put out a statement also, saying possible actions of the american side will have very, very negative consequences and the chinese have put out a statement of their own saying we believe the Iran Nuclear Agreement has played an Important Role in safeguarding the Nuclear Nonproliferation regime and safeguarding of stability in the middle east well see how the president frames this with his own rhetoric this afternoon. But it looks like the Trump Administration plans on walking a very fine line on a deal that the president has called one of the worst ever decertifying it under u. S. Law, but not abandoning the agreement between the United States and iran guys back over to you well see where we get later on today thanks very much another firing over alleged sexual harassment. This time from the financial world. The journal is reporting that star fund manager gavin baker has been fired from fidelity for sexually harassing a junejure female employee. He strongly denies any allegations. He also maintains he left the company on his own they have not confirmed or denied if he was fired fidelity says when allegations of these sorts arise, we investigate immediately and take prompt and appropriate action. Gavin baker has been a guest of the show on the past his last official day on the job, Stanley Fischer getting ready to retire from that post hell sit down exclusively with saraizen in a moment you dont want to miss it. Squawk on the street on the 4heow will be back with t d up8. [vo] quickbooks introduces rodney. He has a new business teaching lessons. Rodney wanted to know how his business was doing. So he got quickbooks. It organizes all his accounts, so he can see his bottom line. Ahhh. Thats a profit. Know where you stand instantly. Visit quickbooksdotcom. Big changes looming for the sdla a lot of these companies are down for the week. As you can see here to discuss some of the headwinds facing the sector, Senior Research analyst at Pivotal Research good to have you back. Good morning good morning. Thanks for having me journal puts this on page one and uses the at t ak as the pivot point. Is this really coming from sort of seasonal or hurricane related . Are we back to talking about big structural changes in the way people watch content you know, theres a lot of legitimately bad news for the industry and i think, you know, i think the charter viacom used certainly sort of amplified a lot of the points. I think at ts release of their subscriber numbers hammered this home but yeah, some of the headwinds impacting the industry, i think if you have an optimistic view on the ability side, then youre being likely to be sorely disappointed and there are other problems yet to come. I dont think most of the Investor Community has an inappropriately negative view on advertising for tv i dont think most of the Investor Community has an appropriately negative view on margin pressure that content rights, sports rights in particular, are going to continue to have over a multiyear period. You can almost watch these kind of pools of investor money going from the old to the new. Some days. But now we have these questions about facebook, about the durability of their Business Model and other kind of new media platforms that have been stealing market share from tv and elsewhere. Netflix seems like the consensus default winner here. Stock above 200 today do you see there to be a place to hide from those advertising trends and the structural cord cutting dynamic . Yeah, there are because at the end of the day, marketers still have to market, if were looking at it through that lens. Not withstanding that i have a cell rating on adobe, but you think about adobe and salesforce. Com, sort of as illustrative of Marketing Technology theres plenty of room to run in the industry, put aside where the valuations are but the Business Models are incredibly sound the worst that facebook gets with respect to a measurement credibility, theres neal sn the reality is third Party Measurement has been made much more important than ever before. And yes, they face pressures as well for different reasons, but thats something to think about. But i think that a lot of the advertising supported in media related industries are facing longterm permanent secular challenges brian, how much is your sell on disney if thats what you still have, is about investments in going direct to consumer. We had other calls this week that suggested it would weigh on near term results, but the long term payoff potentially could work out yeah, i mean, i havent explicitly baked that into my price target or recommendation, although its the sell rating in the 80s on the valuation the issue there, a lot of people arent thinking about, lets remember when facebook was going to build 600 million for the rights to indian cricket, for digital only rights for five years, the equivalent in the u. S. Would have been a 24 billion bid for nfl content, if you look at the relative size of the market. In a couple years time, when the next rates packages start to come up, meaningful rights, would any of us be surprised if facebook would put that kind of bid on the table think about what thats going to do to pricing. This is going to be true for all sports as facebook and amazon and google are finally understanding that if they want to tap into tv budgets, they need tv grade content. They understand this now so for so for the old line rivals, is the solution going to be to meet those prices and outbid or to say goodbye to the content and work on Something Else well, this is exactly a conundrum, right you face the declining revenues or lower margins pick your poison brian wieser, big, big existential questions for some Media Companies right now. Please come back soon. Well talk to you later. Thanks for having me. When we come back, bitcoin soaring to new record highs, surpassing two big banks in market vueal well tell you which ones and why. Squawk on the street will be right back ories are thinking. Even your toaster is thinking. Honey, clive owens in our kitchen. Im leaving. Oh nevermind, hes leaving. But what if a business could turn all that thinking. Thinking. Endless thinking into doing. To make better decisions. Make a difference. Make the future. Not next week while you think about it a little more. But right now. Is there a company that can help you do all that . i can think of one. when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Another record high. The market cap now tops 97 billion. Thats larger than Goldman Sachs, morgan stanley, traders said the bitcoin rally was sparked by speculation china could reverse a recent ban they had put on crypto currency exchanges. Its up more than 480 year to date jamie dimond yesterday called it a fraud but said he wasnt going to talk about it anymore they had comments about it yesterday, and blankfein has, too as the large chiefs of Banking Companies have to learn what its about, essentially and balance the idea that the Core Technology about transferring money and being more efficient in the back end balanced against this idea of why does the kerracy have to go screaming higher in value . Thats hard to reconcile in a lot of peoples minds who dont necessarily see the innate connection between the two things block chain and bit coin being worth hundreds of dollars more every day. That doesnt necessarily make sense. Howard marks had a note where he asked if is a story of value . Is it an asset class, a currency is there a consensus behind that really not a consensus. You know, whats gold . Gold, you can use it to fill your teeth, so its a consumable its also a value, and in a pinch, a currency. It can be kind of all of these hybrid things. I think a lot of people were mentioning more than four ounces of gold now is what bitcoin is worth. That might be the more relevant comparison, comparable to market caps in Financial Institutions its not worth cool to be worth four ounces of gold. At 57. 50, people are drawing Straight Lines worth keeping in mind, the rumor today that china might reverse, its a matter of this market exists at the pleasure of the governments that allow it to exist for now. Yes risk factor and regulators willingness to tax or not tax. When we come back, Federal Reserve vice chairman Stanley Fischer is getting ready to retire from his post today is his last day on the job. Hell sit down with sara eisen in a moment. Dow up 58 points well be right back. Well, its earnings season once again. Yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Im Morgan Brennan heres your cnbc news update at this hour. Millions of Social Security recipients will get a 2 increase in benefits next year its the largest increase since 2012 but it comes only to 25 a month for the average beneficiary. The Social Security administration announcing the cost of living increase this morning. The death toll rising to 31 in the california wildfires. With hundreds still unaccounted for. Flames have scorched vegetation, destroyed thousands of structures, and even hollowed out a tree nearly 300 square miles have been charred kobe steels president telling reporters the company had uncovered nine more types of products whose inspections had been faked or manipulated, including copper alloy pipes and steel wire rods. Both are used in vehicle tires and engines. The chicago cubs are moving on, beating the Washington Nationals 98 to win the Decisive Game five in the National League division series. The marathon game ended around 1 00 a. M. Eastern time and the defending World Series Champions will play the Los Angeles Dodgers for the National League pennant. And thats our cnbc news update at this hour. Sara, over to you at the imf in washington, d. C. Morgan, thank you very much we are here at the Imf World Bank meeting were joined by a very special guest right now. His last interview on his last days of vice chairman of the Federal Reserve, Stanley Fischer joining us here. Welcome. Thank you so what kind of mark did you leave on this fed . Oh, thats not a question you can ask me well have to wait and see what the rest of them say when the time comes any thoughts, though, on the legacy and the opinions that you voiced over your years over the years, i was very centrist and believed more or less in what the fed has done and what it did in the crisis in particular i think what the fed did in the crisis was innovative and critically important in stopping the possibility of a great depression, which was a real live possibility at the beginning of the period. And now comes the tricky part of getting out of that Emergency Response over your years, you were there during the beginning of the normalization to higher rates. Right do you feel like we should be faster on that front when it comes to progress toward normal . Well, i wish i wish the circumstances were such that going faster was the right policy, but given the uncertainty about the inflation rate approaching the 2 target, we have to be more careful than full speed ahead whats your theory on that . We have another soft cpi number this morning my theory is that it will theres a thing in economics, when youre expecting something, it takes longer to arrive than you thought. And then when it arrives, it goes quicker than you thought. So i think were still in the getting upset about how long its taking to get here. But you have to consider the other possibility that something has changed significantly. Structurally. Yeah. In the economy. Thats a possibility. Its not your but you know, you cant ignore the evidence for too long alt the same time, were about to head into this new experiment of shrinking the Balance Sheet. Are you surprised that the market sort of yawned around this, and we havent seen tighter financial conditions in anticipation of that well, i think a lot of people say, well, Interest Rates were reduced by about 100 basis points they should now go up by about 100 basis points but this move has been anticipated for so long that a lot of the what is going to happen as a result of it is already being filtered into has been filtered into longterm Interest Rates so i think its not going to move the rate by another 100 basis points it may in total do that. So you will not be there in december to vote on a rate hike. But would you vote for it if you were i think i shouldnt talk about that what about predictions . The market is expecting a hike this year, three next year do you think thats achievable i think thats achievable if we continue to run good policies and with a Global Economy coming up and for the first time in a decade having faster growth in the Global Economy than we expected, theres a good chance of that. We heard from larry fink earlier of blackrock on cnbc this week saying one of his biggest fears is actually a fed misstep, the fed getting too aggressive on policy is he right to worry about that . I think he must be talking about too aggressive in an upward direction theres also too aggressive in a downward direction i think you can rely on this fed to be pretty measured in what it does so you think they should still be hiking rates despite the sort of lack of inflation at the target rate . I dont want to go into youre supposed to share everything now that youre stepping off i am . Well, well do another interview after i step down. Well get the real truth. One other big topic of conversation here at the imf meetings, do the central bankers have the tools globally that they need in case we enter another downturn well, i mean, the theory that the central bankers have to do everything is not right. Theres also fiscal policy, and fiscal policy really matters its more effective when the Interest Rate is at zero and then the fiscal policy doesnt affect the Interest Rate so a large part of the negative aspect of fiscal policy, namely the raises to the Interest Rate, doesnt happen, so its more effective in affecting output, and probably therefore a little while later inflation. If we dip back into recession, everyone is going to be wondering, do we go to negative Interest Rates, more qe those tools are there and theres no point in ignoring things that you can do if you can do them without creating side effects which are negative. Significantly negative so i expect that if we get into enough trouble, well be using those measures, and that we should i dont like using them that much, but it would be foolish to get into recession because you dont like the measures which will get you out of it quicker so where are we in this cycle . About eight years into expansion, are we at the end, in the middle its very hard to say because we dont know whats going on with inflation and when we learn better whats going on with inflation, well know but so far, there are no signs at present that would cause you to say, well, this is reaching its end. We still get increases in employment were still getting increases in output we would love more increases in output and so theres room for expansion, and we would certainly like more inflation. And you mentioned fiscal policy what about the tax reform principles that were getting out of the administration . From what you see, do you see the potential for another growth spurt out of that . I think you could have a short run increase in growth, but you have to be careful thinking about the size of the debt probably more than the size of the debt, the size of the debt servicing costs. That is at these low Interest Rates, we could afford a slightly higher debt ratio for the economy. But youre saying it shouldnt blow out the deficit too much yeah. Because if Interest Rates rise, thats a problem thats right. Youre always scared that Interest Rates are actually going to rise. As you hit fuller and fuller Capacity Utilization and you know, but weve got room for more investment, room for more consumption what about this idea that a cut in the Corporate Tax rate will lead to more jobs and higher wages do you buy that . Well, i buy it at the theoretical level, but you also need to watch what happened to the more corporate profits that have accrued in recent years they seem to have gone into buying back shares more than anything else. So is that your theory on repatriation, thats what will happen to it a question of just to what extent it will happen. It will happen to some extent. Will it be the main thing . I hope not, but it could be. You have to keep watching that do you think President Trump is getting sound economic advice i dont know what advice President Trump is getting and thats not a question that somebody from the fed is going to answer in full ignorance. So ill rephrase it he wants to achieve 3 growth. We havent been there postfinancial crisis. Are the policies hes talking about going to get us there . Well, it depends on precisely which of the policies, and im sure some of the policies hes talking about are there because you dont exactly get through the things that you recommend. You have to have room for concessions to the other side and so forth so i dont think we know precisely whats going to come out of this. But this idea of deregulation, which you have been critical in terms of the Financial Sector on the financial seconder, i thats a major mistake i think if there are lessons of what has happened to us, it is keep the Financial Sector healthy. Do not take risks of any magnitude there. Because once you get into a financial crisis on a large scale, youre in for a very long period of slow growth, and that is not a good idea so i worry about deregulation at this stage you have sounded that alarm before who should he appoint at the next fed chair youre really trying a lot o questions im not going to answer these are hot button issues he should appoint janet yellen you think so . Im not going to go to the risks. What kind of qualities are needed for that job . I think many of the qualities that genet has, which is that janet is a safe pair of hands and very good at explaining what shes doing. And persuading people of what shes doing. I think thats critically important. What about a nonph. D. Economist . How would you feel about that . Look, i benefits from my economic training. And you benefitted many others when i was governor, and in the fed. And so its an advantage are there people smart enough not to need a ph. D. . Certainly, there are people smart enough not to need a ph. D. If they have also got experience in the Financial Sector and in the economy. So i dont like to say, well, you dont have this, you dont have that, you just should be ruled out like that. So how are we going to hear from you are you going to continue to advise central bankers in their jobs as you have been for so many years will you join twitter . Im not a twitter sort, but maybe i should i dont know i have never done it but i dont know what im going to do. Im going to take a few months off. I want to get us reorganized were moving to new york were going to get the apartment set up back to normal life the organizational needs that need doing once thats all done, ill start figuring out what i want to do next but it will include the economy. I promise you. And we hope to still hear from you and brutally honest off the fed. Brutally honest off the fed well, im not in favor of unnecessary brutality. Okay. Well said. Stanley fischer, thank you very much for talking to us on this final weekend. Thank you very much as vice chair thanks very much, sara. Its been a pleasure being interviewed by you over many years. Appreciate that long time. Stanley fischer, vice chairman of the Federal Reserve former imf economist, former govern of the bank of israel, carl, and also adviser and teacher to so many of the worlds central bankers including mario draghi right now. Back to you. Well be looking for that twitter account to go live, sara eisen at the imf meeting thanks when we come back, big tech under fire why our next guest says Silicon Valley is not your friend. New york times contributor nome gome is witush dows up 56. Were back in a minute they dont invest in alternatives or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you cant approach investing from just one point of view. Because its only when you collaborate and crosspollinate many points of view that Something Wonderful can happen. Those people might just get what they want out of life. Or they could get even more. So you miss the big city . I dont miss much. Definitely not the traffic. Excuse me, doctor. The genomic data came in. Thank you. You can do that kind of analysis . Yeah, watson. I can quickly analyze millions of clinical and scientific reports to help you tailor Treatment Options for the patients genomic profile. You can do that . Even way out here . Yes. Even way out here. Bottom, has there been one bull marked or two separates ones good question. Tom mcconnell has answers. For more squawk on the street coming up. Its not just a car, its your daily treat. Go ahead, spoil yourself. The es and es hybrid. Experience amazing. And her new mobile wedding business. Tte at first, getting paid was tough. Until she got quickbooks. Now she sends invoices, sees when theyve been viewed andtadahpaid twice as fast for free. Visit quickbooksdotcom. The New York Times sunday review features a new essay on the threat of big tech thats out this weekend thats titled Silicon Valley is not your friend. For more on this, were joined by the writer of the piece, and the author of the book, the knowitalls New York Times contributing writer noam cohen is with us good to have you thank you weve had obviously the message is clear today, page one of the times is about Silicon Valley perhaps creating more problems than it solves but if you had to pick a moment where this narrative began, when was it i think for the public, wouldnt you think it was the election i think thats kind of where things turned in a big way i said i worked on this book before the election, so i was thinking about these issues, and i feel like maybe i was on a limb, but in the interim, the election ofdonald trump and th question of how facebook and google and twitter were use to aid that really raised peoples eyes because you kind of question these ideas of borders and can we control things like facebook and google and twitter . Are they are they kind of beyond our control, i guess. I think thats what turned a lot of the popular opinion and these networks, obviously, theres sort of an ideology at the center, they want to be this transparent conduit, or they pretend to be, of your preferences. What you want, what you want to share. Theyre driven by users. But obviously, there are ways to tilt those things one way or another. Do they have to kind of question the baseline premise of their businesses in terms of how theyre going to operate thats something you all would know better than me. I wonder how its all going to play out in a financial sense. Is it really credible we could break up Something Like facebook or google . What would that mean when i was thinking about it for the book, for answering questions about the book, i wonder whether we would think of it as a National Asset we would lose if we break up facebook theyre so dominant in the world. Those are the issues were getting at, whether the idea of such monopolistic power is anathema to the way our society should be. You go back just on the technology of a a. I. , the birth of how a. I. Began and where its evolved. I wonder if you think theres going to be a day where were going to try to put some of that back in the box. I guess im not quite as i know theres a lot of debate between elon musk and Mark Zuckerberg im of the camp that doesnt think a. I. Is this threat in the existential way. I dont know i dont think machines are really human. I dont think they have human qualities. Theyre not like our rivals. We do have to put back in the box some of these techniques theyre using like the hypertargeting in the piece, what i sort of said is whats weird about whats going on with this hyp hypertargeting is theyre making money from things we couldnt make money on. I like this movie, this food and somebody finds that valuable i cant sell that. Are you interested in that about me its hard to package this, how to regulate it i think the basic assumptions are wrong or dangerous theres a counterpoint to this is which is every time you have this new dominant wave of techn technology, media especially, there is this. There were concerned about the Television Rating service. People thought networks should automatically put anything out there and it should get these great ratings. Do thing theres a consensus in the Public Interest to question the power of these companies because theyre so big i think the election is what is really doing it i wonder if you agree the sense that maybe a foreign country was able to use these we had no rea regulating and now theres questions whether ads on facebook and google should be treated like political ads when youre asking whats changed, like how the elephant gets its nose under the door, but ive heard you talking the stocks will tell that and whether theres a change in the fortunes just to bounce it back, the fang, so to speak, is stock prices continue to appreciate. Youve got amazon and google back above 1,000, and as our colleague jim cramer said this morning, when other things dont work, its the area where a lot of investors tend to migrate quickly because of hypergrowth its not a comment on their social value the only thing that would challenge that is if the government would step in i wonder whether if the tides are turning in our country, that would be the next kind of focal point. I do think also facebook, you know, these Silicon Valley companies also speak to the income inequality idea i was wondering why it wasnt more of a thing, like the extreme wealth youre talking about with bezos and zuckerberg and why that isnt a similar sort of thing Bernie Sanders was talking about, why isnt that different than wall street great wealth and disparity that gets you back really 100 years ago busting the trusts really they are too big and wealthy and powerful, not so much like a regulative monopoly like a utility in exchange for exclusive access to this territory, were going to regulate your prices. They are big, they are scary, and too rich too much power that way i was almost thinking, you know, imagine like the things they talk about, how great the services are, almost like if you have water, you can talk about youre saving the world autotime you can add things to water, have ads for water it is an amazing thing i was definitely fearful in this book of coming off, and im not. I think these are amazing tools. Im not saying you shouldnt have them, but it is what youre saying whether they might be too big, too powerful, and beyond our regulation thats going to be a debate for years to come. Interesting to see, yeah. I cant wait to see more of your piece hope our viewers take a look thanks very much contributing writer for the New York Times. Lets send it over to john fortt for a look at whats coming up on squawk alley. Continuing up with that conversation, were going to talk about teflon tech apple, facebook, google among big names shrugging off the headlines. Stocks largely moving higher were going to dig into why that is and what it means for everybodys money coming up on squawk alley your muscles look good, but we should be seeing more range of motion. Im fine. Okay, well lets see you get up from the couch. Im sorry, what . Grandpa come. At cognizant, were uniting doctors, insurers and patients on a collaborative care platform, making it easier to do whats best for everyones health, every step of the way. You may need more physical therapy. Ugh. Am i covered for that . Yep. Look. Grandpa catch grandpa duck woah ha there you go grandpa. Keep doing that. Get ready, because were helping leading companies see it and see it throughwith digital. Watch netflix today, above 200 a share believes consensus sub estimates are too low. Goldman currently rates at a buy, has a 12month target of 235 and has a chorus of price increases from morgan, jpm, citi expectations definitely heating up into the number netflix has always been a little bit of the odd one out in terms of the business, they are selling you something direct, you are buying it, choosing to buy it, so its kind of been different, its also much smaller and seems youre not just buying this kind of blanket Digital Advertising kind of play, so i do think people love the story right now and price increases have been a big part of it. Well see if the expectations have really built up too high. Amazing how we went from all that talk of a la carte one day, went directly to episode by episode, series by series. When we return, women boycotting twitter raotesting harassment and abuse. Ka swisher is going to join us on squawk alley when we come back in a moment what started as a passion. Has grown into an enterprise. Thats why i switched to the spark cash card from capital one. Now, im earning unlimited 2 cash back on every purchase i make. Everything. Whats in your wallet . From godaddy in fact, 68 of people who have built their. Website using gocentral, did it in under an hour, and you can too. Build a better website in under an hour. With gocentral from godaddy. The amazing new iphone 8 is at at t. And we know youll love it. Because we know you want more. More great camera features and more power. And more than just unlimited data, we give you unlimited plans with hbo included for life. Because you deserve more entertainment. And more spokespeople. Talking like this, saying the word more. At t. Its time for more. Am i too close . I feel like im too close. Get the iphone 8 and with all at t unlimited plans get hbo for life. Only from at t. Welcome back to squawk on the street. Im Morgan Brennan steel stocks propelling materials sector higher today. Thats on news that kobe steel revealed that about 500 companies, including boeing, had received its falsely Certified Products that could mean more demand for these Companies Trading here in the u. S. Separately, jeffries says that in a note it expects steel margins to continue to outperform even as prices come under pressure in china. Among the biggest gainers today are u. S. Steel, ak teal, nucor, and Steel Dynamics with that, down to squawk alley. Good morning, 8 00 a. M. At twitter headquarters in san francisco, 11 00 a. M. On wall street, and squawk alley is live good morning, welcome to squawk alley. With me at post 9, mike santoli, john fortt out west, sara eise