Transcripts For CNBC Squawk On The Street 20171109

In beijing europe is weak and claims a little higher than expected. The twoyear is at a nineyear high our road map begins with retail movers macys and kohls moving in different direction. Plus, more media m a intrigue the future of at t and time warners deal is in question as the department of justice asks for changes and the two sides may end up in court. And futures are slipping. Markets are awaiting more on tax reform today, as we digest a number of earnings movers. So lets kick it off with jim, who is at west point today, ahead of a big show tonight, jim. And were looking at some early weakness this morning, some attributing it to the increasing difficulty between reconciling what weve gotten from the house, what is being marked up, and what the senate is eventually going to tell us on taxes. Well, im continuing to be very skeptical im looking for a repeal and replace here in other words, i just dont think that theyre going to be able to get it together anytime soon but you know what, were back into a pattern and the pattern is when europe is weaker, were weaker. And ive noticed that europe pulled us down im not all that concerned i think buyers will come in regardless of what happens in congress by the way, its really interesting to see a bifurcated retail thing were going to be going over it. But i thought macys quarter was strong kohls was not andic th i think retail will color the action, because were in that part of the earnings season. Kohls is a miss, a couple of cents. Although comps, jim, down a tenth. A little bit better than the down 0. 7 that we were looking for. True, but i think people are thinking that kohls would be consistently better. I like the call out at macys, where inventory was down thats so important. It was the opposite last year. Sg sk sg a down. I genuinely think that macys will be able to navigate this far better than what the stock seems to indicate. Theres a lot of moving parts in retail today. Elf is going to be interesting down in the premarket lpd has some projections about the Holiday Market they three 36 to 4, which is what we did last year. They also say it will be the best holiday in years for consumer tech. And you can probably guess why right you know, apples going to take a gigantic part of the Holiday Season, as it always does. This one in particular, i think, because of the higher price point of the ten those that have seen the x, carl, i think its pretty breathtaking and the 1,000 price tag is not as bad if you think about it from any if you buy it from one of the big telecos, david will be talking about the telcos and what they mean, but im pretty sanguine about the Holiday Season because of the joblessness. Weve just been having an unprecedented employment rate here i know the claims this morning may not have been terrific, but i think that retail and employment dovetail, always have, which means that the season is going to be strong its just a question of how much amazon captures, because i think that amazon is going to be the star of the show well, to that point, amazon is already getting their marketing plan in line i dont know if youve seen or if we have the holiday ad that amazon is now rolling out. Sort of, a big play, david, on their logistics strength follows a single box all the way through all of the conveyor belts, through the distribution centers, as this girl right here taps on her phone to buy a gift for what looks like her niece or sister this is what its all about. The convenience that amazon uses as its selling point they have, of course, as we know, einveinvested so much int logistics over time. Given that luxury by their Shareholder Base and the willingness of those shareholders over the last 15, 20 years to accept the fact that those investments were being made to secure future clothes. And this is what separates amazon in so many ways this idea, even a couple of years ago that you could get something same day seemed far fetched. And now, of course, its a reality. And that has med them, well, we know it, we talk about it every single day, of course, the most powerful force in retail and the scale of which is simply unrivaled in any way, even in some peoples imagination. Yeah. Jim, it makes you wonder whether its retailers who are nervous by Something Like that, or logistics, whether its i mean, whether fedex and u. P. S. Deserve to be nervous after seeing that. I think that fedex and u. P. S. Have all the business they can handle i think one of the problems is, theyre overwhelmed during this Holiday Season thats really hurt u. P. S i keep comingback to Xpo Logistics as being the last mile provider that no ones talked about. Brad jacobs has got a suburb ecommerce strategy and i think that they will be a dominant player. I also think, look, lets just understand ooemp amazon is making it up so people if you buy it online, you can pick it up all around the clock. None of these companies is doing that particular strategy makes a lot of money on those strategies the fact is is that amazon can make a lot of money because it is so digitized and uses so much artificial intelligence. I dont like the way a lot of retailers are winging it to compete against amazon theres nothing about amazon thats winged. Its process, process, process all the other guys are trying to catch up only walmart, do i see, and thats of course why the stock is up so uch, only walmart seems to be able to develop a strategy that is uniquely Silicon Valley and is very much, very much designed to stop amazon were, obviously, a couple of weeks out from black friday week, and were going to be talking about that in the days ahead. We do want to get to some media news at t says it has no intention of selling cnn as part of its planned 85 billion deal to buy time warner after reports surfaced that the doj wanted to sell cnn to win governmental approval Randall Stephenson putting out a statement, i have never offered to cell cnn and have no intention to doing so. Well hear more from stephenson today on cnbc when he joins our Andrew Ross Sorkin at 1 20 p. M. Eastern time a lot to unpack in this story. There certainly is, carl, and its taken lets say an unexpected turn over the last few days of course, as we reported, as andrew did, and others have a well, that ask from the doj was unexpected it has come in the last few days this for a deal that was very close to the finish line, as i reported yesterday, back in september, they were days away, people close to the situation tell me, from having what they believe would have been a Consent Decree or what we call socalled behavioral remedies for concerns amongst competitors in terms of the bundling that would take place with hbo and direct tv now and the Distribution Network and Everything Else there. They didnt get there. And makehin del rahine was confirmed to his post to run the antitrust division at the doj. And things have changed since then despite the fact that mr. Del rahine said he did not see this deal posing an antitrust threat, well, that was then, this is now. And now were at a point where it appears, at least, if the two sides hold firm to their current positions, theyre going to have to settle this in court. It would seem going into court, if that is, in fact, where we go, that time warner or at t time warner will have the easier case. The government, remember, is the one that needs to bring the case, needs to prove its case. And it would seem to in some ways, at least, according to antitrust experts, need to be relying on a somewhat novel theory, because this is not about jim pushing another competitor out its not a horizontal deal, as they have said, time and again, from the minute they announced it its vertical. We all can see why sprint getting together with tmobile getting together with at at t, or sprint getting together with tmobile would be conceivably an issue for doj four competitors going to three in an incredibly important market thats not whats happening here and so it will be interesting to see what the arguments being made are require them or want them to divest and what at ts rebuttals would be, jim. But it certainly took people unaware. The stock is now 88 bucks. At t was up a bit, but down this morning. David, i think that the big issue here, ive been saying this about facebook and about alphabet, is some sort of jihad against concentration of power concentration of power, with at t and time warner is nowhere near as powerful as the concentration of power that were seeing with facebook and with alphabet. If youre going to go after this merger, do you not, david, have to go after these giant conglomerates that started at small companies, that are now considered to be stiflers of innovation, because theyre so powerful thats, i think, is the key question, jim. Its certainly not clear that were at that point, yet but just think about the events of this week my report on monday of foxs willingness to enter talks with and have talks with disney about selling most of the companys entertainment and distribution assets to disney, as a result of the fact they did not believe that they could compete in terms of the scale required to do so with what they call the big 7 or 678, if you want to call them, the apples, amazons, netflix, googles, facebooks of the world. Jim, then youve got this, where at t would argue, this is what we need to compete and time warner would certainly argue that we no longer want to be alone. We need the scale that will be afforded by being put together into this larger conglomeration of media and telecom assets. So, its a shifting landscape. I think your point is an excellent one. When will that case be brought about simple market power if youre going to go after this one, in terms of sort of the same idea . I mean, you know, yesterday you saw the pathetic parody of profit that we saw from snap i mean, snap is a deeply hubble company, with the incredible arrogance of a team that have taken some sort of permanent intellectual vacation. But i do notice that facebook decided to wipe out snap and they can do it they can do it because they have tremendous power, they have a great vertical now, of course, snap is so busy committing economic suicide, it may not be a good case but it reminds you, do you really want to go up against facebook now its pretty late in the game to go up against a powerhouse like that at t needs this, because its a pitiful its a pitiful, helpless giant without time warner soy totally agree with you i think the Justice Department is trying to create some sort of thesis that this is a colossus give me a break. Its no colossus when it comes to alphabet and facebook no, it isnt. And and again, vertical integration has not been something theyve typically gone after. We say 40 years, maybe a little less than that, but its been a long time since a case was brought to break a deal up or stop a deal that was vertically integrated, carl by the way, when you imagine what the case would be against the facebook or how you would even argue to break that company up, its far from clear to anybody how you would actually do it. What would you break up . And if you believe some of these reports that its truly politically motivated and about cnn, is it clear to anyone what the white house gets, how their concerns are alleviated by having at t have to sell it off . Other than punishment, in some fashion punitive yeah, a punitive no. And that certainly is the concern, if, in fact, it is somehow proven or believed that the white house has truly interfered with and or significantly influenced the antitrust chief to take this action as a result of his being trumps antipathy for cnn, thats a worrisome signal, to say the least as the fcc commissioner, Jessica Rosenworsel tweeted yesterday, are we really going to make the Justice Department use antitrust law to force the sale of a cable channel because the president doesnt like its news coverage. Shes a commissioner, but not the only voice at the fcc. And that concern is being raised of course, at t and time warner are thaep happy to see it out t. Perhaps the idea that if enough of this goes on, it will back the doj up to a certain extent in terms of their ask. Well see. But it will be novel theory and well have to see if and what they actually bring to bear. It will take, what, six months, jim, most likely, for this thing to even see the inside of a courtroom. And that, of course, on the investment front and the uncertainty that comes with that is what concerns investors and why time warner has sold off so dramatically over the past couple of days and this has to be one of the more arbitrary and capricious that ive seen it was when jfk told Bobby Kennedy to get hoffa they set up a special hoffa unit of course, hoffa had not been indicted, not accused, nothing they just said, were going to stop hoffa i guess they want to stop zucker but to carls point a different magnitude to carls point, cnn is going to be owned by somebody. And its going to want to make money and its going to follow a programming strategy, conceivably, that would allow it to do so so who knows what you end up with does he want manafort to run cnn . Its an interesting idea manafor manafort no bannon maybe he wants a change at the top. Maybe its as ridiculous as the prosecution bezos could buy it theres also the added wrinkle that some say bellarine is not favorable of preferred remedies structural meaning you need to divest something. But behavioral is a dissent decree its whats comcast, our parent, had to enter into when it bought control of Nbc Universal its what, way back when time warner bought turner, they had to enter into as well. They owned a Cable Company back then, time warner cable. But that doesnt appear what they want. Its unclear what theyre going to get and how theyre going to argue it is something that the law supports yes and precedent supports. Well be looking for developments david, i just got to ask quickly, david, is it really true that they maybe have to give up direct tv otherwise . That seems like a complete canard what is that, the nfl package . Wheres the antitrust there . One guy has nfl and the other guy has Something Else it is one of the asks, direct or turner, was apparently the ask from doj, jim and youre talking about direct tv now, which many would say is a competitive product in an increasingly competitive market, ben official for consumers and so, certainly some question marks as to why that would be an ask. Guys, when we come back, taxes topping the docket on capitol hill, as the senate now gets ready to unveil its version of the tax bill. Were going to get to fox earnings, square, roku is way up in the premarket. Downgrade for snap and of course, nvidia and disney, tonight. Were back in a minute whether its connecting one of the worlds most innovative campuses. Or bringing wifi to 65,000 fans. Businesses count on communication, and communication counts on centurylink. Futures are in the red this morning. Dow looks to open down triple digits jobless claims up more than expected and taxes top the agenda on capitol hill the Senate Version of the gop tax reform bill is expected to be unveiled today. More squawk on the street continues in just a moment 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 [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Got eight minutes before we get started with another day of exciting trading in the markets. Lets get to a mad dash here send it over to you. The hudson river over your shoulder there, jim, looks beautiful this morning want to talk a little square thank you all right, look. The Payments Processing business, the sector, whether it be paypal, visa, master card, its been red hot. But the hottest stock in the whole group is square. And squares jack dorsey and sarah fire, who our own deidra will be interviewing later today. David, this is ato story about e company that started helping the little guy its now going after the big guy. Everybody uses square that i know, say in the little Restaurant Business that im in. This is a remarkable technology. And because they actually know how youre doing, they can make sure shortterm Business Loans to you, because they are at your register its a remarkable model. A lot of people felt it was going to be an afterthought. Something dorsey had come up with and really didnt matter. Instead, its become the next Big Powerhouse that everybody has to confront. Because theyre doing so well. What that great quarter. Yeah. You know, its funny, my coffee card outside the nyse, he uses square now theyre kind of advanced cash still a little bit quicker than using your credit card. Well, yeah, and fastest is paypal, which eliminated the credit card and the cash dan shulman the other day on mad money, really remarkable story that they have but sarah fryer is driving the bus here of square shes from Goldman Sachs this has a very heavy Goldman Sachs overtone david vineyard is on the board hes the guy that makes me feel very confident about the debt that they are taking on. Yeah, and as you pointed out, squares market cap is very close to that of twitter and he continues to run both companies, mr. Dorsey. Not sure how much longer he can keep doing that. You know, it is interesting that if you look at the valuation of twitter and snap, snaps valuation is higher im thats just wrong i mean, snap really has no no game whatsoever. Twitter has got still a lot of room for its total Addressable Market square is almost tapped out. I focus i mean, snaps almost tapped out i focus on snap, because at 15 billion, its almost impossible to fathom. If this company were to become public now, it would have a blue apron feel, not a canada goose feel yeah, i sense this morning canada goose you feel snap is a suboptimal situation, jim i think youve made that clear i think the whole i think the ipo was ill advised, david all right jim, well take another break. These are terms we use. Yes, they are some of our favorite terms. Yes, they are. Well, were genteel gentlemen. We like to keep it on that level. Well come back to you in a minute the opening bell after this. Stay right there question. What is an answer and how can you measure the value of one . Today trusted answers from trusted sources are rare and precious commodities. 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The opening bell in two minutes on this busy day the president is in china, delivering some big business deals, or at least some memorandums of understanding, which well talk about in a bit. Were looking for the senate to unveil some details or at least brief senators about their own tax bill and then deal book is going to have a packed agenda today uber, mark cuban, Randall Stephenson, jack dorsey, drexler, well try to dip into that this morning. Im headed up there after the show, carl mr. Sorkin manages to get them all together and then he does every single interview himself. Because he can. I suppose so. I just dont want to hear him complaining. Thats incredible to watch it will be great to listen to all of these people. Will they say even more in terms of their fight with the doj right now . Right thats a 1 20 p. M. Eastern time. Jim, you mentioned snap before the break you called it a permanent intellectual vacation. And today, if morgan stanley, their lead underwriter goes to underweight, target 11, brian nowak says, weve been underestimates or overestimates the chances of a turnaround and underestimating the challenges of monetization and execution. Yeah, look, i mean, i think thats becoming the prevailing wisdom it was very exciting out of the gate, but what we really ended up seeing was sampling we saw a lot of Different Companies decide that they wanted to advertise there to see how well it went so you saw big contracts well, it turns out when those contracts ran off, it seems like nobody reupped and i think nobody reupped, because they got areally bad return on investment there are a couple of guys they cited that seemed to like it but i think the vast majority left and thats why you have this Programmatic Advertising that was so without profit. So snap, i love them im trying to figure out if its a company. Maybe its just kind of like an organization were going to see how snap trades theres the opening bell and the s p at the bottom of your screen and the big board today, celebrating its ipo. Chinese Search Engine, sogu, and at the nasdaq, inflarx guys, this is the third we will have three chinese ipos at the big board this week. There have been 11 chinese ipos in this country this year since september, believe it or not it does feel as though virtually every time there is one behind us, its china. Tom farley, the president here, must be going baffert a lot. But that does show you, of course, the power of these companies, the stigma seems to be long gone, carl, in terms of concerns about transparency, rule of law, and things of that nature, when it comes to china and its where the growth is i mean, alibaba is up 109 this year, jim, so far, even being down today and we never even talk about ten cent which, by the way, owns a third, 39 of sogu today and wougt the 21 of snap and number six if it traded here we dont talk about it, perhaps, often enough, given its size and importance in the chinese economy. But, thats where the money is, jim. And so thats where the ipos seem to be but, you know what, i really only have confidence in alibaba. Maybe baidu, but alibaba has u. S. Like financials these other companies are a little bit opaque, historically, when weve seen this deluge of chinese ipos, its a bad sign, not a good sign. I do want to point out that the president had some pointed thoughts about china, really blaming previous president s for having an imbalance. But ill tell you one thing that chinese have been able to do they are able to list securities quickly and without any trouble. The only thing that i have seen that has met any, lets say, real demand here is roku and it turned out that it was worth it because roku had a great First Quarter right out of the chute wow, youre not kidding theyre First Quarter, ten cent losses narrower than the 1. 37 loss we were looking for active accounts were upped, hours streamed were up it was a 30 gainer in the premarket and hanging in it should now, i know amazon and apple both have competing products and it came out during this quarter, but contrast roku with now who im obviously picking on, which is snap. I mean, we thought that snap was going to have a great quarter out of the chute they clearly didnt, they had a ladder, not a chute i mean, a ladder, not a chute. And i think that roku has got the chute. This is really an incredibly Strong Quarter daily average users are up its just these are what you want you want a company to hit the ground running, and the First Quarter is great david, how many times have we seen companies in this most recent period where they become public and its the last good quarter . Apron, right apron that has gone so i know. I dont even know what to say about that thing well, i think we all i dont want to say predicted it, that would be unfair, but we certainly gave the ceo a lot of tough questions that day, jim. And i think many people anticipated that apron would become sort of a 300 or 400 million market cap, maybe not as quickly as they have managed to do that, but youre right, its kind of ugly for a lot of these things coming out of the chute, First Quarter, apron and snap have been among them mentioning dish this morning, jim, if i can, dish is up in an otherwise pretty negative tape why . Well, gross ads were 638,000 net adds of subscribers, they actually added they added subscribers 16,000 they were thought to lose 155,000. Churn was also down. But this gets back to roku, to a certain extent why are they doing so well well, in part theyre doing well because of sling, it would seem. Sling had as many as 2 million subscribers now, and that would make it the largest virtual mvpd by far, compared to all these are the ott platforms we talked about. Sling was the first out, more or less i think it was the first out but that seems to be helping dish, which also did okay in the old dbs business, at least, given the continued declines thatwear seeing. And that stock is doing well theres roku, of course, very strong dish up 4 this morning. That was not anticipated, given the trends weve been seeing there. Well, david, this sounds like the first time we can talk about dish as a fundamental story. All we ever heard of was like, dish was going to do a deal, dish is going to be sold well, its an earnings story its such a nice departure from what we always do, which is, i have to comment on other firms, other news outlets that rumored dish higher. There are some news outlets that try to put it in play. This is just a nice, Solid Earnings story yeah. And so they are being rewarded for it this morning. Fox, of course, numbers also get more into sort of media land they were fine stock is down, as people know. It was up sharply on monday, after a report about the talks that took place to sell most of the company to disney. It was up the next day, but down a bit today. They did not really address on the call last night in any significant way, as i anticipated they wouldnt, any of the news surrounding them, only having a broad comment about that they believe that they had the scale and the ability to continue to scale but as weve said, they are willing to consider and have by their actions in terms of engaging with disney, consider significantly slimming down the company because of the police chief that they do not have the scale to compete in this emerging world where its not about their competitors, their old competitors such as cbs or time warner, its about or disney, its about their new competitors, facebook and google and amazon and netflix but that stock is down this morning a bit, carl. As you can see, s p has their biggest slide since about labor day or so. G Goldman Sachs leading the blue chips lower. Its interesting how macys and under armour and nordstrom, well get to tonight, are all in the green. Yeah, kohls kind of inexplicably said, theyre not really sure about the future macys, on the other hand, spends a lot of time talking about how maybe some of the expenses are under control, that the inventories are under control. What this says to me is macys is recognizing that theres a short story there. And the short story is that the dividend has to be cut these numbers indicate to me that you may think that the dividend has to be cut, but theyre doing well enough to be able to support the dividend, and remember, theyre also trying to fix their balance sheet. Theyre paying down a lot of debt i think hes doing a terrific job. I think hes completely underrated i think that he does not i feel like i have to sell him because he doesnt sell himself. Hes just an operator, but i like the way hes operating. Speaking of dividends, we got a hike out of dr horton, and that is a oneyear game for dhi, jim, its 68 . Yeah, housing shortage continues. And only the Major Players have been able to find the ways to be able to build on big blocks. Big blocks require a lot of legal activity these days. Big blocks require a lot of zoning issues. Only the large firms, lennar, horton, can really be able to win their way through these regulations. By the way, speaking of dividends, watch century lilin c ctl. People feel that is in jeopardy. I agree with the critics this merger did not produce the cash flow that i think is sustainable for the dividend and i think david, we talked about this the idea was you put these companies together and therell be more coverage, not unlike what we saw with time warner, at t one of the reasons i liked time warner, is that there would be more coverage for the dividend and one of the reasons many people believe that at t was willing to do that, despite what certainly many people thought was a stretch on some rationale, strategically was being able to solidify the clothes behind the dividend at a company that relies in part, certainly, shareholders do, jim, on the dividend itself. I know, centurytel is a significant disappointment by the way, they did the direct deal as well at at t, many people believe, to enhance clothes for that very same reason and time warner is down again, we should point out, given all of the news that we have at this point about the potential fight that is looming in court for at t versus the u. S. Government to try to preserve that deal, to acquire it at t, for its part, is up, as you see right there. Although, jim, you would wonder if the deal went away, if they did fail, lets say, in court, its unclear what time warner would do, whether there would be interest from a fox again, for example. And what at t would do, to your point. Randall stevenson, by the way, would be looking at two failed deals. Tmobile a number of years ago and this one that would not look good on his record, either he will join Andrew Sorkin at the deal book conference at 1 20 you know, i thought it was interesting. You said, i did not agree that our willing to sell cnn. I always find these ceos i always question the word i. Its a little bit more of a we. Maybe its because im at west point, where theres a notion of we, not i. But i thought it was really interesting that Randall Stephenson had that, you know, like, listen, its my company and i didnt want to do it there are other people working at at t. Maybe andrew will bring that up about maybe the other people i dont know maybetha i mean, Ivan Seidenberg felt that way about verizon and always regarded it as a coalition of other people its true carl, its interesting, by the way, their statement yesterday from at t about never wanting to have sold, that jims referring to, i never wanted to, referred from a statement from the doj. There was no statement from the doj, it was just a report from other news organizations citing a source who said that at t had offered to divest cnn. But they referredto it as a statement, that was a bit confusing. Yesterday was very confusing. Especially in the span of an hour, as the ft and then the times had very shades of aggression it would be divestitures i was happily at lunch during that period of time, but then i came back to that. Yeah. So the dows down 115. And were going to watch this action closely Bertha Coombs is on the floor for us today hey, bertha. How are you, carl yeah, weve seen these largecap indexes notching new highs every day. A lot of folks may not be that concerned if we see a bit of a pullback some folks saying its time to take some money off the table today. Some of the things people have watched is the small cap russell 2,000, also down again today along with the big index its now off about 1. 5 for the month here in the first six trading sessions as far as tax the sectors are concerned, tech has been a big winner so far this year, and so far this quarter today, we actually have consumer stables. Retail, actually, turning around biotech has been the big loser, which is off about 6 for the quarter. Health care overall has been one of the things that has opinion under pressure and as we watch for the senates unveiling of its tax bill today, one of the things that a lot of Health Care Advocates will be watching for is whether the senate goes along with the house and tries to get rid of the medical expense deduction. This is a big deal for people who have to pay for longterm care, about 10 million of them use that deduction every year to offset those costs that are not covered by medicare, could potentially have an impact for some of those facilities down the line if that happens meantime, Home Builders have been one of the areas thats been with potential curves, but as you mentioned this morning, d. R. Hortons results much better and the company is also very confident about 2018, raising its outlook for next area. So they dont seem to be concerned about tax reform more disappointment in retail from choulkohls, as you said, continues to be a terrible, nogood earnings season overall. But we are seeing a little bit of a bounce. A lot of these retail names have been beaten up quite a bit today. Macys big the biggest gainers today in that toururnaround. Also, we have an ipo well be watching today its one of about a dozen chinese ipos that are going public here in the u. S sogu is the number two mobile Search Engine in china they have been taking market share from baidu and they are backed by internet powerhouse, ten cent theyre priced at the high end of the range at 13 a chashare, raising more than 500 million and finally, taylor swift is going to be dropping her new album tomorrow, reputation. And just as the revolution will not be televised, reputation will not be straeeamed, guys. So bad news for pandora. Not sure how long that ban will last, but youll have to buy it if you want to listen to it. Amazon and apple, of course, do have that other revenue stream, if you will. Carl when taylor moves, definitely, the industry listens. Thats for sure, bertha. Thank you very much, Bertha Coombs when we come back, roku shares are skyrocketing after its first report as a Public Company. The ceo, anthony wood, is going to join us later on and in a few moments, the ceo of uber his first public interview after being named head of that company, live at the deal block conference the twoyear did hit a nineyear high around 1. 65 at fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. 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. Mark zuckerbergs 2016 tour of the United States is coming to an end in a new post on facebook, after visiting oklahoma, he writes, he had found tech doesnt create more jobs some industries win, some lose quote, the number of jobs stays about the same in order to operate the increasingly advanced technology, people need more training and therefore get more pay. Were going to find out if thats true. Certainly, some other people have different views of the future, david. Yes, they do. A lot of robots and artificial intelligence, not a lot of jobs, but there is a heated debate about that and of course, the advance of technology, everybody willtell you, ultimately results in more jobs, not fewer jobs i dont know about that. Jim i dont think a robot is going to replace you no, but ive got to tell you, when i was out at dreamforce, i was shocked to see a presentation where a company said, listen, we have bots and the bots are so much like humans, you dont even know. And that did make you think, well, what happened to the humans before they were replaced by bots . Not clear. Yeah. No. Huge displacement and then in the meanwhile, jim, you talked to Straus Zelnick last night on mad money about the company and specifically about consumption. Heres what he said. The average workday is Something Like 22 hours in the United States now. Were obviously not staying up that long. We do a lot of things at once now. We have the ability to multitask only about an hour and a half of that is video games right now and its the fastest of gr estf part of the Entertainment Industry on a weak where we got the latest version of the xbox, jim, were reminded of the strength of gaming. Yeah, look, grand theft auto is the greatest single piece of entertainment in history. It just keeps giving its actually about accelerating here all the Video Game Companies now are beginning to embrace e sports i know that strauss is talking about esports and owning basketball teams starting in the spring this can be very the spring this is people watching other people game. Its kind of a Second Derivative but its taking over the country by storm yes, i love the 22hour day. That has to do with multitasking right now, im playing candy crush while im doing the show maybe not. I believe it. Maybe more call of duty im doing more call of duty. Reset button. Call of duty, you do not. No, you dont. No, i dont but im going to watch la noir a new dark video game i think it will be great set in the 1940s in los angeles. L. A. Law, wasnt there a show by that name. L. A. Noir like that night. The movie, okay. Were going to get stock trading with jim in west point this morning in a moment rading you know, a lot of people laugh when comae goose became public, saying its probably only a seasonal business what do these guys no. Theyre using direct to consumer they came out with great numbers. This isnt even their season this company is like it was built for the internet it is surprising the upside. Its put blue apron down here in terms of peril, canada goose up here its really remarkable. Jim, we do have the worst session for the nasdaq here since august we had that reversal in the nikkei overnight what do you thinks going on in. Well, i do think weve had i think there is some sort of big program with really a lot of tech just being sold here and a lot of banks being sold here let it come in a little. Nvidia reports tonight when it reported last, there was a gigantic decline nvidia, one of the Great Companies can of our time has had too big a run based on cryptocurrency we downgraded it for the club i figure in pretty prominently that is going to cause a lot of people to say wait a second, this group has been too hot. Well find out tomorrow. I understand it. Techs moved a lot here. Lets give it a break. Well get invidia, disney tonight as well as and nordstrom. Jim, lets explain to viewers why youre in west point and how special mad money is going to be tonight. Well, look, we have to thank people who are veterans and we have to thank the people who come to this great institution, the military academy were going to have alex gorski, distinguished graduate, runs probably i think the most profitable pharmaceutical company, j j its just a special place. Weve got to salute it veterans day is coming up, its now veterans week. Theres so many veterans that need jobs. We have to figure out a way to get corporate to get veterans. By nature, veterans are a team and dont think about themselves as individuals weve got get them to do that in order to be able to get jobs. Cop cast makes a big effort, jpmorgan unveiled a plan to extend loans to veterans were glad youre giving attention to it. Well see you tonight. 6 00 p. M. Eastern time. Thank you guys. When we come back, new uber ceo, Dara Khosrowshahi live from the conference the nasdaq down 1 [ keyboard clacking ] [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Talk to one today and see why were bullish on the future. Welcome back to squawk on the street. Im Carl Quintanilla with david faber at the New York Stock Exchange got to sell off on this thursday morning, downtown is down 116. Worst day for the nasdaq got complications regarding an the tax bill as the senate is poised to unveil their version well see how hard that is to reconcile with the house but retail not helping either. A lot going on. Yeah, and it started in europe which set a pretty defensive tone early in the action which youre still seeing right now. Youre seeing defensive tone across currencies, as well some of the big miners and materialmakers in europe are selling off on commodities youve got a strong showing for one thing, which you cant forget the context stocks near record highs globally meanwhile, time warner, at t continues to be a big story today. Were going to talk to john kline formerly of cnn in a few moments about that then the earnings season will continue nvidia and disney tonight, nordstrom. Our road map for the hour does begin with big retail we have a number of movers here. Macys and koes reporting earnings with nordstrom and pennys results on deck. What macys ceo said about his outlook for the retail sect sister next. Then Dara Khosrowshahi will sit down with Andrew Ross Sorkin. And finally a deal in jeopardy the latest on at ts takeover of time warner. Antitrust regulators pushing for major changes. These two sides could well end up in court. As we said earlier, markets seeing losses across is the board. The dow coming back a bit but still down 0 points. The nasdaq down a full 1 . Interestingly, today is the day the s p could set the alltime record would likely set the alltime record for the longest streak without a 3 drawdown. Mid 90s, 370 days judging from todays action, still early in the session. After we close another fresh record high yesterday gave up some of the big declines we saw only only utilities and Consumer Staples are higher this morning. That is on the back of buying of treasuries, something weve seen a lot of people pointing to the high yield selloff that could be a sign that thing are turning. Were going to watch that carefully. Were also watching big retail reporting earnings this morning. Macys and kohls. Courtney reagan spoke with the ceo of macys earlier and joins us with more. The initial reaction to macys shares saw them pulled lower in premarket action. Shares actually now higher for the Department Store the Conference Call is just now starting i spoke with jeff gannett over the phone this morning to get more color on what happened in the quart. Will comparable sales did disappoint, the hurricanes in florida and texas hurt more and so did warmer weather early in the quarter. October though saw it start to pick up. Tourism lower in the Third Quarter than in the quarter prior. Still it, earnings beat Gross Margins also improving ga net told me anything that wasnt cold weather related actually sold at or better than expectations when it comes to guidance i asked him if he was being conservative he said that he thinks its where we need to be. Gatt net says the Fourth Quarter is really macys shines. Kohls shares are lower on mixed results. The Department Store missed on earnings but posted its first positive comp sales in seven quarters by a hair but still counts back to school sales were strong but margins were lower there large increases in both nike and adidas according to the ceo kevin manziel and continued Strong Performance from underarmor manziel wouldnt elaborate much on the call about the early results from amazon returns. Guess well have to wait for more time to pass. Nordstrom reports after the bell of the three Department Stores reporting day, sales expectations are the highest for nordstrom. Well see if they can pull it off. David, back over to you. Yeah, well keep a close eye. Kohls the worst performer thank you courtney at t this morning saying its got no intention of selling cnn as part of its planned 85 billion stock and cash deal to acquire time warner. The Justice Department wants them to sell turner broadcasting or directv vermont in order to get approval from the government to go ahead with the deal. Socalled structural remedies being south by the government as opposed to behavioral remedies which typically take the form of a Consent Decree to not do this or that. John kline is a former cnn and u. S. President of that network and tap media ceo now. First its fox, disney youre back a couple days later. What a week. What a week for media, of course, two unexpected stories this one also. Its a vertical integration, typically not something that meets with a great deal of disapproval from the department of justice doesnt seem to be the case here into markets hate what, they hate uncertainty the doj has introduced a huge level of uncertainty around their m a philosophy in general. Right . If markets think that m a decisions are going to be driven by personal vendettas, thats not helpful. So i can offer them a potential philosophy they might put out there. Maybe theyre concerned about comcast. And heres what i mean about that comcast is a company that resembles what at t would look like after a merger with time warner distribution as well as content because they own nbcuniversal. This order to get there, they didnt have to shed any assets, no structural issues for them. And a Consent Decree. Which lapses in less than a year maybe the antitrust division, which is now run by a guy who used to lobby for comcast wants to send a signal about the kind of behavior they expect of these big new coming media conglomerates. Thats the benign interpretation but right now, theres a void. Theres no interpretation. Theres no explanation because it doesnt add up to say that somehow shedding turner, which is cnn, adult swim, tnt, tbs with all the sports, somehow shedding that is going to solve potential issues again, theyre not knocking out a competitor which is typically the case for why the doj would potentially take action against a merger. Youre raising the prospect though that this is simply because the president doesnt like cnn he has said so. He has said so on many occasions. He said before he was elected he wasnt going to approve the deal. That is true, as well its not his role, of course it is highly unusual in the sense if theres a direct connection between him and his attorney general Jeff Sessions and del rahim has a reputation to rely on also. Carl raised the point earlier, so what if they were to sell cnn . Does it necessarily mean it would result in any more favorable coverage absolutely not. Somebodys going to buy it and going to run it as aggressively as its been run for the last few years. What if thats sinclair instead . Could be. I mean, could be you can imagine how the tone would change. Sinclair which by the way is getting a free pass to go ahead and cover 72 of the u. S. Market so they dont the doj doesnt see any regulatory issues there. Or the fcc which is an important certainly in the regulator when it comes to local broadcast stations is the key regulator. Right but somehow they see them here so it does race the specter of it, and theyve got clear this up quickly. Its probably more of a legal question even if there is a valid case to be made by the doj about consolidation of power, if at t can use the president s words against him in court with tweets, constantly bashing cnn. You would think and at the same time, just the sheer business logic says that at t as a content owner would want their content in as many places as possible on their own systems and others because they get paid by those distributors and by advertisers based on the number of eyeballs and as a distributor themselves, at t which owns directv, would want to feature as many channels as possible because could you imagine if at t pulled fox news off of directv, theyd lose 3 million subscribers overnight. Thats how many people are watching fox news on a given night. Right, but there is objections from the like of stars i believe saying the ability of time warner to offer hbo free or discounted rate to subscribers debilitates us as another pay tv provider. Take the case of the next netflix out there somewhere has a legitimate fear that they could be stuffed down, right throttled down, beneficial pricing for at t on properties those are legitimate complaints to have. But those are not dressed by forcing at t to sell either directv or turner broadcasting of all things. When you talked about the benign explanation of setting some framework for what they expect, what do you think they might expect from these Companies Post mergers who knows republicans supposedly believe in laissezfaire, let the market dictate. They have said that that there is a plethora of content and distribution opportunities for folks. So theres no need to have a heavy hand in regulating any of this so i thought till i saw the news yesterday that that was going to be the marching order. Maybe it still is philosophically but maybe there are personal reasons for this happening. Right. You ran cnn once jeff zucker runs it now. He knows the president well. Yes, he does. They work closely together. Helped make him who he is today. He did. And is running cnn well. Do you buckle in some way or a new corporate parent in at t, do you think that that raises concerns, as well given theyve certainly put on notice they do complete this deal, that well, you know, it could be theyre watching very closely. Cnn is one of the crown jewels of time warner. It was always treated that way youd be surprised if new owners would somehow want to damage the brand by reining it in any way theyve said they have no intention of doing that. You know, the proof will be in the pudding. But i dont know any journalist or news executive most of whom have been journalist whos would tolerate much interference from the corporate level. Jon, thank you. Thanks for having me. Jon klein joining us. Roku a big story. Take a look at the stock this morning up 30 in the premarket and still has a gain of now 48 . The company seeing an increase in active accounts and streaming hours as well as a continued push into the add business anthony wood is the ceo of roku. Anthony, congratulations on the quarter. Weve had you on several times in your life preipo did you imagine a stock, some price action like this you know, we had a great quarter. I dont spend a lot of time thinking about the stocks obviously. But you know, we did really well on all fronts especially our advertising business and building our roku tv programming. We feel super well positioned as the world transitions to streamin year on year, platform up 137. Hardware up 4. To what degree are you watching the Slower Growth of hardware revenue . Yes, so our business really is about building active accounts which grew 48 in the quarter. Great growth, driven a lot by roku tv program and we monetize those active accounts. Thats our Platform Business and where 90 of our Gross Margins come from. So for us, selling players is just a great way to build accounts and we optimize that business around volume of players. Player unit sales up 35 in the quarter. Asp down a little bit. So Revenue Growth was slower thats not our goal with the player business. Its the drive active accounts. You also say users streamed 3. 8 billion hours in the quarter up 58 from the same period a year ago who are these people are they cord cutters . Where are you getting business from you know, our people often ask about our demographic. Its americans were americas leading streaming player you know, maybe theres slightly more millennials but its the whole range of americans, people switch to streaming because it provides a better way to watch tv, more content and better value, as well anthony, ive asked you this question in the past given especially what weve been seeing over the last six months, the tumult if you want to call it that in the pay tv world, what are your expectation heres are we in the midst of the seminal change the way people view tv and pay for it and will streaming numbers continue to accelerate in terms of growth rate yes, we are in a tectonic shift in the world of television and advertising, moving to stream roku has you know, our active accounts grew 48 , 16. 7 million active accounts. Theres a lot more households in the United States and the world and everyone over time is going to shift to streaming. I think importantly, the entire add business, television add business which today is still predominantly on traditional linear tv is moving to streaming. Thats the big change, as well he anthony, a lot of your competitors in the space have developed a taste for creating their own original content youve resisted that why . Do you think youll do that for long you know, our business is being a Distribution Platform for other peoples other companies consent being a large scale Distribution Platform. We dont have any plans to produce original content. Are you worried about moves like disneys going at it alone in terms of Distribution Getting off the netflix platform in a few years . Do you worry as the content creators become bigger, they can take on the distribution themselves when a company like disney you know, if they do launch a channel thats an over the top channel, we are the leading ott Distribution Company in the u. S. So those companies naturally come to roku for distribution of their content. Were just a great partner for them weve built a lot of features to help them build audience to, help them reach a scale audience, monetize their content. Those companies as they shift to ott, that is driving our business in q3 we launched directv now on roku, launched a new version of hulu, hulu live. Theres a ton of content moving to streaming were the best. Immediate to drive that content. That drives our Platform Business. Youve come on in your preipo life were glad to see youre coming on after you went public thanks again thank you. Anthony wood, ceo of roku. Huge gain today. Ubers chief Dara Khosrowshahi is sitting down with Andrew Ross Sorkin lets listen in for a moment. Just help us understand the thought process and the process itself because if you read the headlines during had period, it was a practical insurrection going on on the board. There were scandals every which way. There was the holder report. And youre thinking, what did you need to know before you took this job and did you make any demands of them i did make certain demands of them, absolutely listen, what i knew is that this is an incredible brand and a terrific service and i have seen that thing are never as bad as the press makes them out to be and theyre never as good as the press makes them out to be you know, the public version of whats happening is often overkill and overdramatized. To me, its about. Was this overdramatized this time maybe this one wasnt overdraim dramatized but listen, to me, it comes to the product and the brand and frankly, the product and the brand that this Founding Team travis and his Founding Team have built is extraordinary. And the talent at the company is extraordinary and the culture went wrong and the governance of the company went wrong and the board went in a very bad direction. But if the product is good, then if you can bring in good leadership and you can ultimately bring it together i think were on our way were on our way its going to take a lot of work, but after two months, i feel better about where we are than frankly, i was going in so what is your relationship like with Travis Kalanick . Its a Good Relationship. But its also it comes with balance. What i told travis very early on is that any new ceo needs space. And needs distance from the old ceo. And so i told him very early on, travis sometimes im going to be pushing you away early on because i need my space. I need to be able to meet with a team i need to be able to communicate with them so theyre just communicating with me and they dont have someone to go around if they dont like something theyve heard, et cetera so youve got to let me engage with the team, engage with the company, engage with the culture. And i was a little worried about that conversation. But actually he took it really well he took it really well and hes been very respectful and at the same time, hes been available to me whenever ive needed him and i think were going to go through a process where early on, ive got to put my stamp on the company. The new team has to put the stamp on the company and over a period of time, i would be foolish not to use travis incredible genius and his knowledge that really was you know largely responsible for getting the company to where it is now so hes there. When i need him. How often do you guys talk . It depends. Well talk, some weeks we wont talk, some weeks well talk ten times. Do you think he wants to be more part of this than he is. I think so. How hard is that conversation to have with the founder of the company . I think he understands the why which is early on, ive got to have my space and be able to push the company, kind of right the company. I think he respects that intellectually he gets it. Hes been very plain with me he wants to be involved with the company. Ive told him i want him involved with the company, absolutely. Theres a huge debate going on and still going on on this board. Theres a lawsuit between travis and one of the largyer shareholders in this company, also on the board. Yeah. About super Voting Rights in part and at some point, i imagine your interests may be diverging with his or at least the interest that he thinks he has i think that that is true of traviss interest and potentially larger shareholders interests. Listen, when i got into this role, i didnt want to take sides. And the only thing that i was focused on and i wasnt interested, you know, you have meetings with certain parties and they tell you about stuff that happened in the past and stuff that theyre emotional about, and everyone is, if you listen to one party or another party, they seem justified in their anger. And ive kind of told all size im not interested in what happened in the past im interested in the company and the employees and the brand and how we move forward. So ive tried to consistently play this role where i dont take sides, dont tell me about what happened. Tell me what were going to do and as it relates to governance, for example, weve taken some very i think positive actions as it relates to governance, actually the board itself and the high vote shares voted to get rid of the high vote shares and essentially get into a one share, one vote situation. Were reconstituting the board its going to be a big board but thats okay. And i think step by step were preparing the company where youre going to have much better governance Going Forward and ready the company for an ipo. It feels there is still tension on the board in large part because theres been an expected investment as you know from softbank. And part of that investment requires everybody on the board getting it together. Yeah. And that hasnt happened yet. It hasnt happened yet but it will why whats happening because the our making the changes in governance is unquestionably good because our bringing in softbank as a strategic investor at the right price would be a good thing. Weve got to get to the right price, et cetera and youre right theres negotiations going on. Theyve probably taken longer than they should have. But were going to get there because all the parties in the end, they know that this is a good direction to go in. We just kind of have to badger our way. You do see the perspective i imagine, of traviss side which is hes saying to himself, im the founder. I started this thing and now i want to run this thing. And i have these shares. We agreed when we first starred this thing, i should get more votes than everybody else and now theyre telling me the thing they agreed to isnt the deal that they agreed to. Yes, but the high vote shares themselves as a class are voting and travis in the end agreed with the direction that were going. Lis, the fact is that you have i dont necessarily have anything against high vote shares but there are many, many, Many Companies that have low vote shares, amazon, sales force, et cetera that make the kind of longterm bets that you would want any company, starbucks, to make so theres this reasoning behind high vote shares that i dont think is necessary in real life. And high vote shares work when the leadership and the high vote players actually are in concert and you have two parties here who are far from being in concert. And are shooing at each other. What i told the board is if youre going to shoot at each other, at least lets shoot each other with conventional weapons instead of nukes get rid of the high vote shares and become a great governance, lets become a great example of strong governance and lets move forward. This is not about control. This is about the company. One more question on this particular topic and i want to go somewhere else which is this. Tell us about the day that you learned that travis wants to put three Board Members on the board and didnt tell you. Two Board Members. Im sorry i apologize, two Board Members you put out an email to your staff calling this disappointing news and highly unusual. What was that day like it was disappointing and highly unusual what was it like inside the room listen, it was a surprise now, the Board Members, the thing i was disappointed in is that the Board Members that travis picked are actually great Board Members in terms of their resume, in terms of their background, and it put news a weird situation because actually, the subjects the folks that he picked were great. But we didnt like how he got there. He had his own peschell reasons. I dont want to recount them he can recount his reasons i think in the end its going to be fine because ursula and john arent on the board because of travis they are because they picked them but theyre on the board because theyre interested in the uber situation it looks like a difficult situation and they think they can help. What was the culture like going into this . I wanted to ask you before, before you took the job, did you ask to read the holder report . How much diligence did you feel like you needed to do . I did not ask to read the holder report. And listen, the holder report isnt public but i think a lot of the elements of the holder report are out there so i had read the susan fowler post, et cetera. I certainly knew the company by reputation i looked at a bunch of the legal stuff that they were going through and the financial matters of the company and the fact is that actually the company, despite all of the all of the swirlard at company has been operating at a very, very strong cadence and what it needed was a culture reset and thats something that i think im pretty good at and thats something that to me seemed like a great challenge and a great opportunity. Did you ever think about making the holder report public . Thought about it. Thought about it, but listen, the holder report has a lot of details. And listen, its details about behavior that to some extent has already been reported that is nonskoous excusable. But the holder report is actually very detailed with lots of individuals, et cetera who may not want their stories public you know, they were interviewed. They were in situations, et cetera, and if they wanted their story to be public, they would have made them public and i think from a material standpoint, it would create a bunch of sensational product out there, but it wouldnt change the story and it wouldnt change the direction that were going in and i this i weve been very transparent as a company about whats going on at the company, where we are and where were going. Where is the culture of the company now . Youve put out a value statement. Norms we call them. Norms behaviors, yes. Which were in large part a repudiation of the culture under travis id say yes and no. Yes and no so there were there were certain Cultural Values at uber having to do its like toast that being principle confrontation that meant well. Intellectually you want to challenge your fellow employees to get to the right answer but theyre twisted into excuses for bad behavior and just being an asshole, right that did not work even though that was not the intent of those Cultural Values. So were very clear then in our new norms ha that kind of behavior is not acceptable at the same time, we carry through a number of values about acting like owners, making big bold bets, ideas can over hierarchy, a lot of ideas that were actually in the old culture of the company listen, the values of the company were different they were interesting. They were not all perfect. But the fact is that its those values that created the most highly valued private company in the world. So you dont want to take everything that brought uber here and throw it away because theres a huge amount of value and capability there you want to get the best, take the best of what brought the company here and then combine it with a new set of norms and a new set of behaviors to take us to the next step. Youve said the next step the company has been explicit the next step is an ipo eventually. 2019 is the target. Travis used to say that he wanted to stay private for as long as humanly possible jeffrey was asking a question of Howard Schultz about the public versus private markets given all of the spotlight on you now even as a private company, why would you want to be public . Said it best. We have all of the disadvantages of being a Public Company as far as the spotlight on us without any of the advantages of being a Public Company so travis and the whole board now agree we should just go public the numbers support it the system support it, et cetera and the fact is that if you set up the company in the right way and you are honest and plain spoken to your investors about being a longterm player about surprising shortterm Quarterly Results for longterm gain, you will find that right set of shareholders who will support. You do you need to do that to get the capital that you need from Companies Like softbank do what go public no. No i think the results of the Company Speak for themselves and by the way, they can get better and we can execute better but actually, if you talk to softbank, they dont have any particular interest in going public they are the result longterm investor i have a quick softbank question i saw i knew you were in saudi arabia two weeks ago as was i. There wasa fascinating article in the times earlier this week by our tech columnist talking about really the idea of saudi money or potentially russian money or other money, foreign money, if you will, in the valley uhhuh. And how the valley or Corporate America should think about that 45 billion of soft banks 100 billion comes from saudi arabia. There was earlier investment made by saudi arabia how do you think about that . Well, first of all, i wouldnt commingle saudi money and russian money. Theyre different animals. Right . And the saudi money didnt come with any Strings Attached other than the strings that any investor would have. And yasser who is on our board has been nothing but a model board member whose so interest is helping the company get to the right stage of maturity, et cetera i wasnt here, but at the time when we took the money because i asked the team about it, the company definitely talked about it and i would say the most important issue for the company was the womens rights in saudi arabia and actually, the company explicitly talked about how we actually believe that women should be able to drive. And since then, the changes that were seeing, the cultural changes were seeing in saudi arabia they are unambiguously positive theyre daring but it certainly does seem like the country is moving in the right direction. Lets talk about the operational business itself and part of an ipo i imagine, i dont know if youll get there by then but how do you make this Company Profitable there has been an argument made over the years given all the capital thats come to you and so many of your competitors, that we are all having our rides home and elsewhere subsidized by the Venture Capital community and that there may never be a day where the math actually adds that day is today because the math is actually working in certain areas in certain geographies. If you look at the portfolio of the business, there are certain markets such as the asiapacific markets, if you look at Southeast Asia or india where we are in heavy heavy investment mode and appropriately so and we lose money, the bigger the company gets, the more money we lose because were actuallicy diesing those rides. But we have been able to demonstrate a track order and youve got to look in the numbers and look in the geographies where over a period of time we can pull back on the subsidies and over a period of time get into a position of profitability on agee Graphic Business it doesnt happen everywhere but you think we can certainly demonstrate it. Whats the key and time frame for that to happen it depends on the market and the Competitive Dynamics in the marketplace. To some extent. Pretty fascinating interview with the new ceo of uber, Dara Khosrowshahi, formerly of expedia talking about what it was like to come into that company amid all that corporate drama. His relationship with Travis Kalanick, why an ipo makes sense. He said weve had all the disadvantages of being a Public Company without any of the advantages i thought it was funny he said he didnt think he was a serious capped for the job in the beginning. It wasnt even a call he wanted to take and bet his wife he wouldnt take the job. He said he has a Good Relationship with cal la nick. Shed light into a potential softbank investment. Thats still out there as a possibility in part relying on this copied hostility on the board of directors that andrew was asking brch Dara Khosrowshahi about namely about benchmark and the line uber needs liquidity as in sales created by the very shareholders and wants peace on board prior to making a very significant investment from the vision fund. More from deal book throughout the day a news update from Contessa Brewer hi there. After meeting with x, President Trump says they have agreed on the need to implement all United Nations Security Council resolutions on north korea. Today, president xi, we discussed our mutual commitment to the complete denuclearization of north korea we agreed not to the replicate failed approaches of the past and there were many. Pacific Officials Say a suicide bomber struck a vehicle carrying a Deputy Inspector general of the police in a southwestern city killing him and three other officers the taliban claimed responsibility nine others were also injured. Six catalon lawmakers are testifying in madrid about steps taking by catalunya to declare independence from spain. They could face 50 years in prison if charged and found guilty of sedition thats the cnb news update for this hour. More squawk on the street when wecombae ck, including Lloyd Blankfein and the ceo of adidas on that companys earnings cale lal sat down with s Lloyd Blankfein in china as the president continues his tour through asia and she joins us now from beijing with more from that exclusive morning, kayla good morning, carl. After literally rolling out the red carpet, president x jinping tonight threw a state dinner for President Trump toasting the two the countries as partners not rivals attending the dinner officials from either country as well as an executive delegation that inked what the Administration Says is an estimated 250 billion worth of cross border deals. Among them, Lloyd Blankfein whose Goldman Sachs set up a new 5 billion fund with chinas Sovereign Wealth Fund to invest in u. S. Industrial companies that are exporting to china. He today told me that the chinese economy is stable, healthy even though risks abound. I took that opportunity to ask him about down side risks in the u. S. Market. Heres what he told me. The Downside Risk id say the i would say this is a period of high anxiety without a specific thing to be anxious about. In some respects because you look at it, you know, the economy is virtually full employment. Interest rates are low inflation is low which justifies to some extent the low Interest Rates that we have, Commodity Prices are low conditions financial conditions seem pretty benign and so but yet, theyve been pretty benign for a long time. We all know theres a cycle. We also know when money is as cheap as its been, maybe its not being allocated efficiently. If its not being well allocated maybe there are bubbles popping up you dont always see them till they burst what happens if that adjustment takes place at the same time that the economy is getting a big stimulus from tax reform or an infrastructure bill is that ultimately a good thing for the economy or could it have unintended consequences . Well, the nature of unintended consequences you dont intend them, of course i would say and you know, i have said this is not a moment in time when the economy is going pretty well. The last quarterly gdp it wasnt the whole year this isnt a moment in time crying out for a big stimulus but the government feels that the rate of growth that can be achieved without that kind of a normal, you know growing economy of the scale of the United States could grow more than 3 . Thats a big controversy but if theyre right and they can stimulate even higher growth than they have now. If theyre wrong. If theyre wrong, they run the risk of overheating the economy and inflating it but i would say we feel so far away from inflation and i never thought i would have said this early in my career, were trying to cause inflation to some extent because theres almost not enough of it. Reporter so theres a new termfor you, economic anxiety is what blankfein fears. He does agree with the trump administrations overall goal of ginning up growth in the United States despite his frequent and thinly veiled criticisms of the administration, he does support them well have more from that part of the conversation next hour. Carl in. Ill take it, thank you. Kayla tausche. Coming up, adidas coe after the companys strong showing in north america. The stock is down 4 markets overall are red. The dow down 108 points. Disney higher ahead of earnings. The s p 500 is off half a percent led lower by technology. Well be right back. Olf. Wait, what, what happened . I was having a good round, and then my friend, sheila, right as i was stepping into the tee box mentioned a tip a pro gave her. No. Yep. Did it help . It completely ruined my game. Well, the truth is, that advice was never meant for you. I like you. You want to show me your swing . Its too soon. Get advice thats right for you. Investment Management Services from td ameritrade. Company stock is an unlikely bigtime winner since the election find out at trading nation. Cnbc. Com more squawk on the street coming up. [ keyboard clacking ] [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Adidas Third Quarter sales out tonight. The bright spot continues to be north america, 31 growth in this market as the German Company continues to steal share. China was also strong. European sales slowed down leading to a miss overall. Potentially one reason why the stock is down. Earlier today i spoke with ceo Kasper Rorsted about the results. Top line number by 12 and bottom line by 35. 30 of the u. S. And 307 in china and 40 online were seeing a 7 growth in western europe down a couple points were not very concerned about that overall, as you know, the european economy is grow big 2 to 3 points while slightly slowing down its not an overall concern of ours we think spending will pick up with the world cup spending starting to take place in russia. Talk whats happening in north america. Are you just taking share from rivals like nike or are you expanding the marketplace here. We dont believe the overall market is expanding. Perhaps slightly in the ath leisure side but overall theres no doubt we have taken share and estimate weve doubled our market share in our foot weier business in the last two years in the u. S very Strong Performance. Are you seeing were seeing is professionally driven environment. The best reaction to that is bringing new exciting products into the market. Of course, having great Brand Ambassadors in the u. S i noticed you recently hired posh spice Victoria Beckham distinguishing yourself from the likes of nike which is focusing on athletes mainly youre going more for the celebrity tastemaker are you trying to differentiate yourself through that strategy. No but we think the market between athleisure and performance is closely connected. We think we need to build beautiful products both for i would say the consumer and sports consumer. We want to make sure we have the right balance. We signed the mls a couple months ago and now signed posh for our reebok brand we believe balance of both is going to make us successful. So far that strategy worked particularly well in the u. S what are you introducing new and exciting right now for a while it was the retro trend, sort of the style versus performance. In terms of ath leisure. Whats coming in 201 to keep it going . Youll see expansion of our are entire portiportfolio. Our three Carbon Products where we can 3d print a shoe customized to the consumer i want to ask you about the ncaa scandal now that one of your executives jim got toe has been indicted. What do you know at this point about what went on in terms of allegations of bribery and corruption i hope understand i cant comment on the details we immediately within 24 hours had external counsel do an investigation to reveal everything thats going on were committed to getting all the facts on the table and make the right decisions to move on we are a company committed to compliant behavior and upset about whats happened. Overall the basketball business is 1. 7 of our total revenue we dont think it would impact our business. Digital, you made a big splash at the dream force conference introducing your new app. Feels like the next front in the sneaker war is going to be waged on apps, on digital. Whats special about yours. I think theres no doubt creating a relationship with the consumer and creating better products and more relevant information so the consumer is going to be what distinguishes one supplier versus the others i gave you one example before, the 3d printed shoe is a way of shoesing digital towards the consumer and also having the app delivering the right information to the consumer so when they connect us, we know he or she a runner and interested in a number of things we can be very specific to that one consumer were investing resources in the u. S. And china to give the consumer the right digital experience. That is the story with adidas, it continues to be one of a battle for market share in new york america its whats been driving the stock and constantly driving the outperformance in a slowing category nike still dominates the u. S. Sneaker market clearly with 34 share and also owns jordan brand. It has basically half of the market but adidas has doubled its share over the last year at almost 11 there under armor with a small slice trying to get into the footwear business. Thats the story people constantly ask me why this isnt a growing market. Its a category slowing down nike reported its slowest sales growth in months under armor reported a decline and it continues to be the sweet spot of result turl little relevant shoes and fashion in ath leisure. A lot of viewers wonder given that north America Needs resets on pricing and inventory, did that affect adidas at all . He talked about a promotional and competitive environment. He said the retail picture, the carnage we talk about, the macys sales for instance and the wave of bankruptcies doesnt affect them. He says he was underpenetrated in the u. S. In terms of retailers. Thats why hes focused on digital on rolling out that new ai powered app stores like foot lock remember increasing what theyre putting out from adidas. Clearly thats the style working and as i told you guys many times, a lot of this really is about kanye west and yeazy hes the most valuable person when it comes to the shoe market even if the shoes put out by Kim Kardashian on instagram were ugly are they paying a lot of money . I dont know how much, but nike used to work with kanye west its still the most expensive neeker on the market in terms of the resale market. Adidas took it apparently hes hard to work with really, kanye hard to deal with yeah, shocking. As we head to break, look at shares of square Beat Estimates on earnings and revenue while raising fullyear guidance stock is off a little less than 2 square ceo sarah friere joins us in the next hour on squawk alley. Stay with us ar joins us in the next hour on squawk alley. Stay with us 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 firstthen you put yourselfareer. Through school. Got the degree. Youve given it your all, to reach the goals youve set. Dont let student debt hold you back. Refinancing Student Loans with sofi can save thousands. So you can get where youve always been headed. Sooner. See how much you can save with sofi. The leader in student loan refinancing. Joining us from riyadh with more from the interview, good morning, hadley. Good morning, carl. So of the 208 people that have been rounded up in saudi arabia under this investigation, this major crackdown on corruption, what we now know from the ministry of justice is that seven of them have been released without charge they are also looking for the whereabouts of around 100 million they say has been siphoned off the saudi state over the last few decades due to corruption and embezzlement. I had a chance to catch up with the former foreign minister of saudi arabia and asked him for me bottom line is, money was stolen from the public treasury, and that robbed the country of the ability to invest it for the good of its people, and so, of course, people have to return the funds that were stolen all of this, of course, coming around heightened tensions with iran now saudi arabias foreign minister also telling me he believes the United Nations should get involved, there should be new sanctions against iran i asked him about that and what happens next he said iran is on a rampage listen in. Until and unless iran behaves like a normal country that respects international laws, that respects the sovereignty of nations, that respects the principle of good neighborliness and not interfering in the affairs of other countries, it will be impossible for people to deal with iran so a wide ranging interview talking about lebanon, what to do about hezbollah, everything to do with this corruption crackdown and essentially the message from the Foreign Ministry is this should not deter investment carl hadley gamble, those comments moving oil today, as west texas is 57. 5. Our thanks to you. We had a pretty nice reversal off the lows of the session. We were down on the dow at one point as many as 151 points. Tech and industrials leading the down draft, but goldman went positive, russell had a reversal to the upside. I think tech is going to be worth watching throughout the day. Its been such a key leader of the market and the leader has been the chip makers one of them, one of the best performing up 90 this year, nvidia, reporting earnings after the bell today maybe it was the launch of the fang futures contract that put a dent i think its still the sixth best performer this year youre talking about nvidia yes, nvidia specifically. Well see what earnings look like after the bell. Tonight when we come back, a lot more on todays price action squawk alley continues in a moment rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Welcome back to squawk on the street. Im dominic chu. Stocks are trading lower, but off their session lows the s p 500 tech sector is the worst performing one so far today, down by nearly a percent. Shares of a variety of different Tech Companies out there, including ebay, electronic arts, chip makers, nvidia all down between 2 and 5 . Certainly a sector to keep an eye on, its taking a breather that does it this hour for squawk on the street. Lets send it down to the New York Stock Exchange for the start of squawk alley. Back to you. Thank you good morning its 8 00 a. M. At roku headquarters in los gatos, california, 11 00 a. M. On wall street, and squawk alley is live good thursday morning, welcome to squawk alley. Im Carl Quintanilla with sara eisen, mike santoli at post 9 of the New York Stock Exchange. Interesting day as the eightweek run the markets hav