Transcripts For CNBC Closing Bell 20170717

Gorgeous layered its of wrestling . Have you seen it . I have not. Well see how thats affecting subscriber numbers and whether or not they are hitting peak netflix right now. What will to expect coming up here. A lot of competition. Procter gamble taking on activist investor nelson peltz and why the Consumer Products company is fighting back and whether it can be successful well get into that coming up. And why the Health Care Bill remains uncertain. New reports say that tax reform will actually move much quicker. We have details on that coming up lets start though with the big week for earnings. We have black rock shares under pressure at this hour after that disappointing Earnings Report this morning leslie picker steps in with details on that. Leslie. Reporter hey, bill, thats right. Blackrock raked in 104 billion during the quarter to put that into perspective, its qt funds were stand alone they would be the 26th largest in the u. S however, 80 of that comes from money going into blackrocks ishares etfs and index funds the firm has been lowering fees on etfs to capture more share as well thats a big part of the story behind blackrocks financials during the quarter revenue and net income both increased, but they missed analyst estimates. Blackrock reported earnings per share of 5. 24 on an adjusted basis while analysts were expecting 5. 40. The firm posted revenue of 2. 92 billion versus estimates of 3. 02 billion. The whole industry though is at a turning point. For the First Time Since 2008 at the beginning of the financial crisis the revenue pool and profit of traditional Asset Managers fell worldwide in 2016. Thats according to a new report by the Boston Consulting Group to survive in such a winnertakesall market bcg says Asset Managers need to cut costs, invest in technology and merge. Guys well, leslie, for me thats what makes this morning so interesting because blackrock would seem to have all of that working to its advantage so even if they had, you know, people moving into lowerfee products, they should still benefit from getting the assets overall, right . Why do you think it the market was so disappointing thats our thought exactly. The challenge for analysts is to better understand this new world where much more of the flow is coming in the door from the lowerfee products now, they are seeing you know, they have their equity products and fixed income products that are actively managed and reshuffled their active equity unit during the quarter so were starting to see and this is something that larry fink said on the call this morning, were starting to see changes in outflows as a result of that so the higher fee products is what were seeing move out the door while were seeing coming in the door some of the lowfee products, and so we did see a jump in revenue, but it just cant quite surpass analyst estimates. It just highlights for me again that were in the midst of a watershed period of how things are changing so rapidly. How we shop and how we watch tv and movies and how we invest, and all of those industries are scrambling to try to keep up with those dramatic changes. Technology. Yeah, absolutely. Leslie, thank you. Thank you. Go ahead, finish your thought. I was just going to say that the executives on the call this morning spent at least a third of the time talking about how Important Technology is. Technology is the future they will invest 1 billion in technology this yore and in the next five years 30 of their revenue will come from technology as you guys know, its one thing to invest in technology and another to see the outcome of it. Thats going to be interesting. Leslie, thank you so much. Our leslie picker. Thank you. Investors awaiting earnings from after the bell from netflix. Thats the biggie due out after the close. Our Julia Boorstin has a preview. Julia . Reporter hey, kelly, after earnings netflix shares swing on average 10 in one direction or another and its subscriber growth which investors focus on the most they hope analysts will top the forecast of 200 million new subscribers in q2 and 2. 6 million expected to come from overseas now the Second Quarter is usually the slowest for new subscribers, so netflixs thirdquarter forecast is even more important analysts are looking for nearly 4 million new subscribers then with over 80 of those new subscribers coming from overseas but Ceo Reed Hastings has been pushing for investors focused on revenue and margins as the companys investment in content and Global Expansion pays off. Now, analysts project 31 Revenue Growth to 2. 1 billion and Earnings Growth of 73 to 16 cents per share. Now analysts are speculating just how much netflixs subscribelers get a boost from a new lineup for shows such as glow and 13 reasons why along with favorites house of cards. It was noted in the note that google searches for netflix increased in the Second Quarter, pointing to accelerating international downloads of the app in the corner. One big question for the 6 00 p. M. Webcast is whether content cost will be pushed even higher than what weve already seen projected from hastings. Guys i have a question i may or may not know of a family where they share a single password. How old are the kids . They may be they may be in their mid20s at this point. How does that affect their subscriber growth, and do they plan to do anything about that well, you know, this is an issue that was brought up many times over the past couple of years. We havent heard that much about it from netflix recently, but netflix expects families to share accounts and they have a certain number of streams you have going tame. It sounds like they are not worried about that every couple of quarters we hear more questions about it by i think they are okay with us, just a small family sharing an account and having four streams which is about the standard. As for whether or not accounts are going to be shared boydly which can be more problematic for them, haste its has dismissed Major Concerns for them so far so certainly an area that they are watching on the call. I predict subscriber calls will slow enough. Thats the thing hastings would argue that maybe an older son. Yours was using your password and got hooked on netflix shows he might be inspired to subscribe and sign up himself. Wouldnt that be great, i mean, theoretically speaking. Theoretically speaking. Yes, of course. See you later. Lets get to our Closing Bell Exchange today not a big volatile day, and a reminder that the dow, the s p and the russell are in record territory. Any positive close for those three will put them back in record territory intrepid phoenix suns kevin travis and Kenny Polcari at post nine and Rick Santelli at the cme in chicago kenny, here we go. Earnings, blackrock is already out. Disappointing numbers there and now netflix is out tonight. Interesting about blackrock and the whole Technology Conversation because blackrock came out four or five months ago talking about how they were replacing pms with watsons, right, because they were looking forward to the passive investing and lower costs, blah, blah, blah, so i guess it makes some sense that they are losing a high end and they are seeing a growth in the low end because thats kind of what they laid out a couple of months ago that. Being said, look, its another quiet day. Low, low volumes no action in the market which actually surprises me a little bit because after fridays move higher into this record territory i just figured the market would digest and back off a tiny little bit, but quite honestly its really done nothing all day except holding here tight on edge not only this afternoon but the earnings as we move about in the rest of the week. Im looking, meanwhile, mark, at some of the picks that you have here. Teradata is a tech data and lucadia has jeffries, im not sure if thats relevant to the discussion we were just having but why the names attractive to you . The. Kelly, in the world of the extended valuations we search the globe for mispricings, and were able to pick up leucadia and Patterson Ugi put some stock and has an unimpaired Balance Sheet so we want something when the markets finally do go bump in the night we can protect our shareholders capital and make a reasonable return so those are two securities that we think fit that bill. Rick, you have a couple of Central Bank Meetings coming up overseas are you expecting any fireworks from those, or what are you talking about right now . You know what i think the dynamic with Central Banks, it may be even including the u. S. Is that the idea of trying to get things back to what they used to be was the objective for 2017 i do think many of the Central Banks are going to fall short of that and kick the can down the road a little bit, i think especially europe and europe has to be center stage you know, they are at that point where we were several years ago. And we know that things arent settled up and we know that policy is still having an influence and weve gotten used to the natural gas aroma of policy their currency and market and investors are doing what we did. They love the markets, and, you know, there are underpinnings to be proud of. Some of these economies have started to look better, but, you know, can you ride pretty fast on training wheels until you try to make the sharp turns, so i think those are the issues to keep center stage, but i also would underscore i dont think that its going to impact the markets in a trendchanging fashion any time soon. I think the timeline for europe to have some fun in the sun while it lasts might be longer than most than the u. S. Would think so more of the same. As for treasury yields, you know, they arent playing around with this lower 230 where several base points on long curve and a lot of flattening going on, but lets not forget 2 it. 17 the low close of the year and also settlement for 2015, 2. 27 where were at now and thats the zone you want to pay attention, to especially if violated on a daily or weekly close. Really quickly, kenny, got a bunch of data from china the markets there stumbled a little doesnt seem to be having much of an impact, does it . Absolut more of an impact than it did here in the states listen, we got more kind of disappointing data here in the states the empire state, though positive, still disappointing, and, you know, thats been a string thats been a string of lately which is why im a little bit im a little bit confused on why the markets are holding in here where it is, unless its now thinking that all bets are off come september and december with the fed. All right guys, we have to go. A little bit of breaking news here, but thank you for all your thoughts on todays Market Action thank you very much. Lets go to john harwood in washington where its made in america week john bill, it is made in america week we see if youre taking the live picture of President Trump, Vice President pence coming out to highlight made in america products, but very odd thing just happened in the White House Briefing which is that sean spicer, the White House Press secretary in an audio but not video briefing, was asked the obvious question about trump products ivanka trump and President Trumps products made overseas and asked how you could justify that in light of the made in america emphasis and what sean spicer said the demand of supply chains and scaleability may require some products to be made overseas, that we may not have the capacity to do some things in this country and, therefore, it makes sense now, to state the obvious that is exactly what ford and carrier and walmart and every other American Company that has supply chains overseas, does manufacturing overseas argues about their products its also the argument that Companies Make about immigrant labor, that is to say there arent americans willing to do that work, and the response from the Trump White House has been raise wages enough and people will be willing to do that work, so sean spicer is is justifying practices for the Trump Administration that the Trump Administration does not accept from other multinational companies. Guys im shocked personally. John, thank you. John harwood there we veal more from the president s appearance where hell be making some remarks at made in america week momentarily as he admirers that i dont even know what kind of equipment that is. What they are looking at. They have have around the white house grounds there, they have items that are made in each of the 50 states so hes look at Different Things that have been made here in the United States but specifically made from each of the 509 states. By the way, as Companies Like foxcom look to bring products, what will the supply chain look like maybe its not economical. You cant turn the spigot off overnight. No. Youve got to the change the economics big time in order for that to happen yes, well be monitoring this and the president will be signing a proclamation declaring this made in america coming up in a while. Meantime, headed to the close, about 45 minutes left in the trading session here the dow is now negative and so is the s p so they have pulled out of record territory but the russell is still right there we have activist nelson peltz launching a proxy fight against Procter Gamble to get a seat on that companys board. When we come back, whether he can get his way and how he plans to jump start p gs stock growth. And steve forbes joins us to discuss whether the republican Health Care Bill can pass the senate and whether tax reform will be a bigger challenge to pass in washington coming up. Reach out to twitter, facebook, send us an email, wish somebody a happy birthday who aty or may not be celebrating th birthday today, whatever you want to talk about youre watching cnbc, first in business worldwide [music playing] across the country, we walk. Carrying flowers that signify why we want to end alzheimers disease. But what if, one day, there was a white flower for alzheimers first survivor . What if there were millions of them . Join us for the Alzheimers Association walk to end alzheimers. Register today at alz. Org walk. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Yogigspeed internet. Me . You know whats not awesome . When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids. And these guys. Him. Ah. Oh hello that lady. These houses yes, yes and yes. And dont forget about them. Uh huh. Sure. Still yes you can get it too. Welcome to the party. Introducing gigspeed internet from xfinity. Finally, gig for your neighborhood too. Fedex still feeling the effects of last months cyber attack and said today in a securities filing the attack will have a material Financial Impact on its tnt express business fedex says that it does not have Cyber Insurance or other insurance to cover that attack, and it cannot estimate at this time when tnt services will be fully resort boy, lesson learned. And medtronics had a computer crash that affected they were saying it was going to affect their result, and these were, you know, whether because of a crash or because of the intentional hack, its becoming more prevalent. Cyber security insurance will be a big thing soon. Nelson peltz forcing a proxy battal peltz smoke to squawk on the street about this earlier today. You have people at p g for the most part, not for the most part but 99 who have never had another job by p g you should have a soft target that at least 25 of them to come from other companies because these guys only know one playbook at p g, okay, and they get together to solve a problem, you know what they are doing, they are talking to themselves joining us now to talk more about this is Jonathan Feeney here at post nine and gene irkin is with commerce street capital. The premies that nelson is going on, john, is they are so entrenched, these people at b g, to solve a problem they are just talking amongst themselves, they are not getting a fresh outside point of view which he feels is badly needed to jump start this company do you agree with that i think thats true to an extent i mean, any consumer leader has a tendency, any time you do a job so well, you start thinking of your own capabilities and how to fit products and consumers desires into that as opposed to thinking of flitting your cape abilities to that. Think about the big changes in the marketplace, able to reach people through social media and local competition and developing markets, makes sense that maybe they are at some other places where new ideas and new responses to those threats could have come about more efficiently and effectively. One of the examples that nelson peltz gave was Dollar Shave Club bought gillette over a decade ago, huge acquisition and said maybe the gillette standalone could have responded more dynamically but under p g criticism they couldnt. Is that what is emblematic of this company at the end of the day peltz has been pretty patient. P g hasnt performed, especially with as much weight and they have to throw around and with weight comes scaleability, and we just havent seen the scale from p g, especially from a margin and a topline Revenue Growth standpoint so i think if you create a leaner, numberabler organization and focus less on m n and costcutting for growth they would be better off, and i think another point to make is as it relates to p g, the bottom line is that they have become way too process focused and not enough productfocused for their own good are you calling, gene, for them to be broken up absolutely. I think even nelson peltz says he doesnt think thats necessary. I mean, as as citrocal as he is of the bureaucracy that exists at Procter Gamble, he still feels theres enough synergies among the various products that they offer, that they dont need to be broken up so why do you disagree look, i think they would be fine if they remain intact, but the bottom line is p g hasnt been leanand nimble enough to adjust to the ever changing world around them and as we mention earlier they have become way too processed focused and not enough product focused, and i think if you create a leaner, less Bureaucratic Organization it would allow them to do that and ultimately attract more value. I read in the journal that pr gs new product is a bug killer for the home. Look, i wouldnt mind a product like that, so maybe thats a good example of innovation, but when it comes back to some of the sources outside their control, the dollars come up a few times so how would you bin some of the macro issues here on the companys failures, and how much of this do they just need to find the next billion dollar febreze product or what have you . I think they would like that. The dollar is the secondary effect in terms of macro and developing markets when youre trying to sell developing markets, could be summers, new household, personal Care Products they havent had before, improving their lifestyle, one thing thats less affordable, thats a hard time to do that thats part of the challenge from the last five years and i think local competition has made it hard they are time around and maybeplooks that have worked not the first time weve seen the strong dollar. Maybe playbooks that works in the past arent as effective as they used to be. Should they be broken up . No, i dont think they should be broken up one effort to get the scale tougher to monetize, retail shelf doesnt mean as much as it used to, but supply chain, logistics, all kinds of other its more important to have scale at lowest cost because consumers are so price transparent. I think it would be a terrible time to throw all that scale in the trash. Find the incentive system and the right people to get the system working internally. Gene, same question if we were to say p g stays as a single entity and focuses on Innovation One thing is brand list is what it sounds like its 3 pricing on all the different products and the whole idea that the quality is bert and that consumers care about quality and dont care about brands how does p g compare in that world. How do they win . I agree yes, they do need to keep innovating and with the scale question its a simple question to a complex answer, and, you know, all that sounds well and good, but the bottom line is i think p g has become too big and too bureaucratic to be able to have the scale and the and the weight that they carry around to work in their benefit and thats a huge benefit. All right boy, i thought we were going to solve it here but we havent i guess its too complex gentlemen, thank you, both for joining us today. Appreciate it very much. Take a quick share of tesla after the lows of the session after ceo elon musk says he needs to clarify stock is obviously high based on past and present but low if you believe in teslas future. Place bets accordingly he said the stoke was, quote, higher than we have the right to deserve. Heres a listen of that. High expectations, i tamped down the expectations to be a possible effect. Im on record several times as saying that the stock price is higher than we have any right to deserve. And thats for sure true based on, you know, where we are today and have been in the past, so the stock price obviously reflects a lot of optimism about where tesla will be in the future you know, its not the first time hes said Something Like that there was another time when he said he felt the stock was overvalued and it tank it had, and he to clarify, it so i, you know they were up 70 this year before the recent pullback. Right. So its been as big a run as stock has seen. The shorts have had their way with it recently, much to his chagrin. Tesla shares are down 2. 5 . Yes, they are, a little more than 30 minutes to go into the close. Dow down ten points and s p down a point and russell hanging on to a onepoint gain and netflix, speaking of big stocks this year, up 30 should you sell it before its Earnings Report due out in an hour that debate coming up. And wage growth may be lackluster we saw that in t jksheoc numbers on friday but more companies are starting to increase their 401 k contributions well find out why after this quick break. 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. Companies in the u. S. Are investing more money into employee retired plans this is interesting. Vanguard group and the wall street journal say the average Company Contribution to 401 k s rose to an estimated 4. 7 of employee salaries in 2016. Thats up from the 3. 9 that they were in investing in 2015 its the highest percentage weve seen biggest year over year jump since at least 2007, which is, you know, significant. How about just some applause, right . Its about time Companies Like microsoft and others have boosted their contributions to the 401 k plans, not just to retain top younger talent. And this is where it gets interesting, too. But also to encourage the older more responsible crowd to retire thats interesting i know there are plenty of people who would have been retired five years ago or so if the market hadnt tanked and they just cant afford to retire, that and the health care situation. Whats interesting its good news for a lot of young people if you call this the Great Recession era, kind of the younger millenials, they were pulling back on these benefits so much, were you lucky if you got any kind of match, any kind of help when it comes for saving for retime i hope at long last after a decade that that tide is finally turning. I agree. And no comment on older workers. Listen, you know me the only reason im so here. I dont ever want to retire. Dragani out of he me out of. The only reason im here is because of you. Time now for a cnbc update with sue herera. Hi, guys. The search continues for a missing person believed to have been a 27yearold man who was swept away by flash floods in central arizona. Officials say nine people from a single family, including children, died in the floods a chineseamerican graduate student at Princeton University was sentenced to ten years in an iranian prison convicted on spying charges, but princeton says hes innocent of all charges. It was a violent weekend in philadelphia 13 people were shot, 3 of them fatally in the city of brotherly love multiple shootings took place in southwest sex in the city. One of those shot sunday night was a 15yearold person. Delta airlines pushing back at anne coulter after the conservative commentator berated the carrier on twitter over a changed seat assignment. She tweeted that delta hires people who seek to be, quote, prison guards, animal handlers or east german police, end quote. Delta called her comments insulting and refunded her the extra 30 that she paid for her seat thats the news update youre up to date. Back down to you. Thank you very much, sue, sue her rare a. Im on the floor with Steven Grasso from your executive floor official. Theres a back to it. Hang on. What everyone takes a number and that means something to them cant tell you cant tell you well move on what about the numbers in the market today thats right. When you look at the market, whats the reason why the market is at alltime highs everyone has argued whether its earnings, whether its deregulation, whether its taxes, Health Care Reform. We know its not Health Care Reform because that doesnt seem like its coming any time soon we know it should have been tax reform, but that doesnt seem to be coming any time soon. We know that it could possibly be earnings, thats coming sometimes soon. Firstquarter earnings were fabulous technologies, semiconductors, theres real growth. If you look tat what do we have now a spiro agnew regulation environment. Doesnt matter if they roll back anything or do anything, nothing new is coming down the pipe. Its deregulation. To make corporations fearful Going Forward so i think that seems to be enough and earnings seem to be good enough to your point to keep this market moving higher. What about oil which has still i mean, were still removing where, when, wti and the same kind of thing. With oil i thought it would trade in at 42 that was a big thing for me. Thats where the market bounced and oil bounced and people said energy, exl, the sector etf is down around 13 or right around that for the year. Event think has to be bought when i say eventually has to be bought is it good for markets . Its good for the markets that hat correlation remains and i think oil somewhat has cleared some significant level. All right. We do need to see oil recover. Oil bear turned gingerly positive. I like that, gingerly. Steve, thank you very much, steve grasso. Bill. Heading to the close, 26 minutes left in the trading session. The dow and the s p are negative now and so is the russel no, russel still positive, so thats in record territory the dow and s p if they finish positive would be in record territory. Nasdaq eight or nine points away from its alltime high the Senate Health care both is delayed so senator mccain can recover from surgery what steve forbes thinks the delay will do to its passage. And then citigroup upped the ante in the market for Premium Credit card rerdwas. What the banking giant is doing to attract new customers and how it compares to rivals. Thats later on closing bell. Whoooo. I enjoy the fresher things in life. Fresh towels. Fresh soaps. And of course, tripadvisors freshest, lowest prices. So if youre anything like me. Youll want to check tripadvisor. We now instantly compare prices from over 200 booking sites. To find you the lowest price. On the hotel you want. Go on, try something fresh. Tripadvisor. The latest reviews. The lowest prices. Senator john mccains medical condition is going to delay the vote on the gop Health Care Bill. Beyond his absent that the bill may be in doubt. Our Kayla Tausche has been tracking that story for us and joins uses from washington kayla. The Majority Leader Mitch Mcconnell said on the floor that the senate would be moving on to other issues as they await the recovery of their colleague john mccain after he underwent that unexpected surgery in arizona to remove a blood clot above his left eye meantime, it appears that passing that bill without senator mccain present would be virtually impossible because there is are two republican senators who have already come out as definitives no, thats senator Susan Collins of maine and senator rand paul of kentucky and then over the weekend senator portman of ohio tweeted a statement saying he read the bill and wanted to wait and see what the cbo score was before he decided he would vote. That the score could come out as soon as tomorrow, but the fact that the recovery of senator mccain could take weeks at this point does put republicans in a very tough position because it does give opposition much more room to run and to find arguments against this bill, especially once they are armed with the statistics that will likely be in that cbo score. You had more protests in Senate Office buildings today, and then you also had attorney general snyderman of new york with Governor Cuomo saying if this bill becomes law they would be challenging it in court so certainly opposition at the state level to this bill, but thats not going to stop the white house from trying to drum up support earlier this afternoon press Secretary Sean Spicer said the president would be hosting senators here at the white house to continue to try to drum up support. He didnt have a list of exactly which senators would be attending, but it does appear that the white house is not dropping the effort just yet kelly, bill . Kayla, happy birthday. Happy birthday. I was hoping to get out of that without a mention but thank you. What is it with you people that you have your birthday you dont want it mentioned on tell vice you know you share it with somebody else and im forbidden from making a big deal about it. Would that be person be sitting right next to you . Why, is it steve forbes birthday kell and i have enjoyed the same birthday for quite a while. Thats true i feel very honored, like a good cosmic sign. Hbd, happy birthday. See you later. As the gop faces challenges passing health care, recent reports say that the Trump Administration is already working hard behind the scenes on tax reform in hopes of pitching its plan in midaugust. Joining us with more is the aforementioned Eternal Optimist himself, steve forbes. Did you just say your birthday is tomorrow . There you are weve got that worked out. What do you think of the Health Care Bill as it stands right now . They have kept the obamacare taxes to help pay for things that would otherwise have been cut back like medicaid and outofpocket expenses here. Well, it just shows how crazy their scoring is, taking out a Capital Gains tax cut which from experience means more revenue immediately is utterly counterproductive. The key thing is to pass the bill, kids rid of the employer mandate, individual mandate and give the governors the flexibility and you can save the system it. The other thing they have to do is pass the cruz amendment to give more flexibility in the Health Care Market the thing is medicaid is the worst designed Health Care Program in the western world they spend more, and the outcomes get worse thats what they should focus on. So would you vote for the bill as it stands right now . I dont like it but i want ing is is better than nothing. The same point made by fred barnes in the journal its more important to come behind this step even if its a half step and not the full end game when it comes to the repeal and replace of obamacare is the that true or if they do this now it means we end up with obamacare light instead of a whole change no, no. The democrats have been working for half a century to get a singleparis is tim and have had setbacks along the way do it step by step if they can do a leap forward they do it republicans should do it, a long journey, the beginning of a journey, not the end. So rand paul is a problem then rand paul makes the bill weaker, why, because mcconnell, Senate Majority leader doesnt have his vote which means he has to make more concessions to those who dont want to make many changes in obamacare. So rand paul is working at crosspurposes and hes helping the democrats and the singlepayer advocate. And if whatever they end up coming up with on health care contributes to the deficit, what does that do to tax reform which is lets face it, you know, ted kennedy spent his career trying to get Health Care Reform youve spent your career trying to get this tax reform bill through. Does the that complicate things for that i think actually its going to spur the opposite reaction, having made a hash of health care, certainly the soap on are a hasnt helped the republican party. I think they will be eager to pats a big tax cut can, ignore the Congressional Budget Office and figure if we dont get Something Big to help spur this economy and get out of its 1. 5 , 2 rut they will get shellacked next year. Even if it contributes to the deficit. The only way to cure the deficit long term is with a vibrant economy. Weak economies beget financial problems, especially when you try to reform entitlements when people are fearful, dont see much growth, forget about real reform. Speaking about the midterms and going back to the the political game of trying to figure out what the right thing is to do when it comes to health care and taxes, if the gop is facing potentially major losses for the midterms, what do you think that does to make the passage of tax or health care more or less likely between now and then i think with tax cuts it makes it more likely same with the English Dictionary who once said the prospect of a hanging focus is the mind wonderfully. The political hanging that the gop will face will get them to do something on tax cuts before the end of the year and they can even make them retroactive, july 1st, april 1st, whatever need something to get this economy moving. Rand paul is a save guy hes taking a principled stance, but what is it that you think they could offer to him for his support of this bill, or is there is there nothing out there do you think i dont know. Im sure they have talked to him. I mean, ted cruz went from an oppositionist to offering a very constructive ament that will help get conservatives on board. Im waiting for the same thing from rand paul how do you you know youre not going to get everything. Governors are not going to allow it youve got real fierce opposition with your own party how do you make something good happen and then come back and have another bite of the apple. For your birthday i hope your daughter gets you a new ipad cover. Steve has brought this in before you use your ipad as much as i do and you said your daughter busts your chops over this one get dad a new ipad cover happy birthday to you tomorrow as well. 15 minutes to go. Its 3 45 here the dow is down slightly and same with the s p. Nasdaq trying to fight into positive territory, and were less than 20 minutes away from the release of netflix earning up next a bull and bear square off on the value of the netaming video mark. Ow bobby flay takes on the shake shack and now they are looking to take on their shakes. Thats next. elegant music and let me play bell rings thithis is the new new york. E . Think again. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov a couple of movers in todays Market Action. Tesla shares under pressure and off the lows now on a report that a man in minnesota is blaming his car crash on teslas autopilot feature. The car overturned in a marsh after he had reportedly accelerated suddenly tesla says it has no reason to believe that the autopilot feature worked other than as designed and shares of blue apron sharply lower after amazon filed a trademark for its own Meal Kit Service which it described in the application as, quote, we do the prep, you be the chef. They already have a slogan it is just the latest headache for blue apron Share Holders who have seen the stock plunge more than 30 since its ipo which was only an june the 29th. It hit a high around 10 and today at 6. 60. By the way, not that the this is going to immediately make the connection to be made, but im just thinking chickfila is also launching 29. 99 for a fourperson takehome meal saying 36 of our people already want something that they can take home, and if youre faced with think about that cost per person, what is, that 7 bucks or so, a lot of meal kits, a new coming out trying to cost 5 but blue apron as such can be easily upwards of 10 to 15 if i can take that home and not doing the cooking and thats what everyone is looking for, but i bet more restaurants will follow. Thats the thing. We talked about this at ipo for blue apron theres just way too much competition, too much fractured nature of this business here. Yeah. As it matures youll have to see consolidation. And from the consumer point of view, bring it on. Absolutely. Shares in netflix slightly higher ahead of the companys Earnings Report that comes out after the bill tonight wall street is expecting earnings of 16 cents a share on revenue of 2. 7 billion for the Second Quarter lets bring in todd younger from bernstein research, bullish on the company and jeff reeves of investorplace. Com is bearish. Guys, welcome to both of you todd, first of all on the bullish case for netflix which is up 30 this year is this a story about user growth for you still or like the companies trying to get people to do are you focusing more on Revenue Growth and Global Operating margins . Its really all about how compelling do you think this Service Really is as an offering, and how big is the global opportunity, and, you know, were really just drawn to the fact that we think in five, ten years were talking about hundreds of millions of global subscribers, and if thats right, then that will be a very valuable and defensible business, we think and the market is pricing that enterprise at 175 billion which we think is at a present value the future thing is still well below what the present value ought to be given how bullish we are on the ultimate prospects. Right let me just warn everybody we may be going to the white house, the president making some comments about made in america week momentarily, so i may rudely have to interrupt you, jeff reeves, during your answer here, but let me just say we call you a bear, but youre more concerned about the Second Quarter earnings seasonally thats usually the weakest report for netflix, so is that why youre bearish, or is there a bigger problem here two reasons, number one, sequentially theres some concern because they said they would push forward the subscriber growth to the this quarter and revenue is more important all they want and wall street will watch the subscriber numbers and bigger picture, the Global Market opportunity of streaming video, like a colleague of mine, dave mckeen, scale and dominance. Walmart has scale but not dominance and netflix is the one f. A. N. G. Comb meant in a others do, the googles and facebook, netflix is going toe to toe with amazon and hulu has an emmy nomination and who knows what else comes out of the woodwork and i agree in the Global Market opportunity there. But a lot of success is priced in, and i think very to take competition a little more seriously than wall street is right now. Its not apple wins. Apple making 103 of all smartphone products. Thats not how netflix is doing. They are going toe to toe with their competitor todd, i want to let you respond to all of that have briefly. Sure. So i guess i might say that one we question whether some of those services are actually competitors or they are actually doing more to help grow the category of subscription video on demand which is how we see it Amazon Prime Video is a great service, you know, hulu has a lot of appeal as well. We actually think that those services are helping move people, viewers no that mode of how they consume content which we think for most viewers its a much better mode, and its not so much competing with netflix if youre not stealing subscribers from netflix we think they are actually growing the category. All right gentlemen, sorry here we go to the president on made in america week. So many great companies, but the gentleman who was in charge of omaha beef, they do beef. He hugged me he wanted to kiss me so badly because he said our business is a whole different business now because you got china approved the other administrations couldnt even come close, and i told him you know how long it took, one sentence i said president xi, wed love to sell beef back in china again. He said you can do that. That was the end of that, right . Sonny, the great sonny purdue. So were very happy, but were here today to celebrate American Manufacturing and to showcase the Amazing Products from all 50 states made in the usa report old days, used to have made in the usa, made in america, but made in the usa were going to start doing that again. Were going to start putting that brand on our product because it means its the best in just a few months and moments i will say what weve done over a short period of time and what were going to be doing over the next six months will be incredible weve signed more bills, and im talking about through the legislature, than any president ever for a while harry truman had us, and now i think we have everybody, mike. I better say think otherwise they will give you a pinocchio, and i dont like i dont like pinocchios. In just a few moments ill be signing a president ial proclamation to launch made in america week and to make today made in america day. We are thrilled to be joined today by so many incredible members of my cabinet. Every member of my administration shares the same goal, to provide a level Playing Field for American Workers and for american industry. [ applause ] and we are providing it much faster than other countries would like, so its been really a pleasure we want to build, create and grow more products in our country using american labor, American Goods and american grit when we purchase products made in the usa, the profits stay here, the revenue stays here and the jobs maybe most importantly of all, they stay right here in the usa. [ applause ] in the audience today true. In the audience today we have skilled workers, we have Business Leader whose americanmade goods were proudly displaying all over the white house and outside. I saw fire engines i saw tractors from caterpillar. I saw some incredible machinery, make it right here we thank you for being here. Were honored to showcase your creations, and i will say they have really taken on, and some of you have built names that i know of for so long. Its congratulations, right, you in particular. What a great job youve done thank you very much, and i saw you on television this morning you were fantastic i dont know what youre doing exactly, but you can always have a second career. You did a great job. Thank you very much. American workers, farmers and innovators are really the best in the world, we know that and what were doing with that is were desplaying those talents you construct and harvest the products that fill our homes, feed our families and defend our nation and enrich our lives. I want to make a pledge to each and every one of you no longer are we going to allow other countries to break the rules, steal our jobs and drain our wealth, and it has been drained. It has been drained. [ applause ] youre going to see a lot of things happening over the next six months you know, satatutorily and through a lot of the legal process. Takes a while to get it set so youre not allowed to do, and now weve mostly fulfilled all of that, and over the next short period of time youll see things announced that you wont even believe for our country and selling product in our country and making product in our country and things that are great for american jobs. Youll see that happening really quickly because we are totally set up, and the hard part now is done it is a long, horrible process, but were going to also get rid of some of that process for the future but were going to stand up for our companies, and maybe most importantly for our workers. For decades washington has allowed other nations to wipe out millions of american jobs through unfair trade practices wait until you see whats up for you. You are going to be so happy this painful exodus of american jobs, and ive been talking about it for years, was also marked by a period of sluggish growth, falling incomes, surging welfare and shrinking participation in the workforce clearly its time for a new policy, one defined by two simple rules we will buy american, and we will hire american, right, governor [ applause ] my administration is removing the burdens and regulations on your companies so that you can compete, thrive and grow how many of you have noticed this so far because its a big, big difference, right . Thats a big, big difference the people are coming up to me they cant even believe it we took the farmers land away we took the Home Builders land away they have their land back now, and they are building homes and they are farming their farms, and its a beautiful thing to say. They are so thankful, so a lot of those regulations have been taken off. The rest are coming off. And by the way, we will have better protection than weve ever had, but well also have something where you dont have to wait 15 years for a permit and then when you go to the board you lose thats a big portion of your life wiped out waiting for a permit were not going to let that happen, but for our nation to really prosper we must lower the tax on business. One of the highest in the world, and we must repeal jobkilling obamacare. We have to do that [ applause ] and i can tell you we hope john mccain gets better very soon because we miss him. Hes a crusty voice in washington, plus we need his vote [ laughter ] and hell be back, and he will be back sooner than somebody else would be back hell be back soon, but we need that vote and we need a number of votes because we do have to repeal obamacare, and we will end up replacing it with something that is going to be outstanding, far, far better than failing obamacare where premiums have gone up in some cases over 200 this year, where your every single element of it is bad, and the insurance companies, by the way, are fleeing so people have some some states you have no insurance companies, and we have some governors here and we have senators here and very have congressmen here and women, and i will tell you its a very, very hard time they are having with the obamacare situation so were going to get that done, and i think were going to surprise a lot of people, but they are pushing very hard the republican senators are great people, but they have a lot of different states. Some states need this. Some states need that, but were getting it together, and its its going to happen, right, mike i think. [ applause ] and when it does happen, that will be a big day in america, believe me, big day in america but we must also fight the unfair trade practiceses that have gutted our industry, and that includes cracking down on the predatory online sales of foreign goods which is absolutely killing our shoppers and Shopping Centers if you look at whats going on with Shopping Centers and stores and jobs in stores, its been very, very tough for them. They have had a very hard time, closing at numbers and records that have never been seen before so we have to stop that. The online predatory practices since the beginning of the year we have already created over 50,000 brand new manufacturing jobs, and were just getting started. We will lift our citizens from welfare to work. We will turn boarded up communities into new outposts of american commerce, and we will once again rediscover our heritage as a manufacturing nation we used to be a manufacturing nation, not so much anymore, but ill tell you look at michigan and at some states that have really moved you know, when pennsylvania two weeks ago, they opened a mine, the first mine that was opened in decades, opened a mine, and you know all the people that were saying the mining jobs, well, we picked up 45,000 mining jobs in a very short period of time, and everybody was saying, well, you wont get any mining jobs picked up 45,000 mining jobs, and the miners are very happy with trump and with pence, and were very proud of that, but thats just the beginning. We have jobs coming from all over restoring American Manufacturing will not only restore our result, it will restore our pride and pride in ourselves it will revitalize our independence, and it will rebuild the bonds of kinship between our communities and our citizens which has been lagging, wouldnt you say for most of our nations history, american you know, we see this. American president s have understood that in order to protect our economy and our security, we must protect our industry, and much of that comes at the border. George washington encouraged americans to produce their own goods so that our young nation could become truly independent president James Garfield said of our nations manufacturers that to them the country owes the splendor of the position it holds before the world meaning protect us Theodore Roosevelt declared in his first message to congress that reciprocity, my favorite word, reciprocity, because we have countries that charge 100 tax on a product, and when that product is sold by them to us we brilliantly charge them nothing, and people say oh, thats free trade. No, thats stupid trade. Thats really stupid trade [ applause ] incredible youll actually have people that say no, we cant do that thats free trade. Thats so incredible, but what are you going to do . Oh, what happens in washington, you just wouldnt believe the things, but reciprocity must be treated as the handmaiden of protection, and William Mckinley proclaimed that we ought to take care of our own nation and her Industries First we have to look at our nation first for a change weve been looking the other way for a long, long time, and if you look at whats going on and the success of other nations, even in europe, you look at some of those countries, one in particular, its not fair to the United States, and thats why im here, and i believe its one of the primary reasons you elected me and mike. I mean, thats why were here, and i think youre going to see a big, big i dont think, i dont think. I know youre going to see one of the great differences, and youre already seeing it, but its going to get more so and more so, and were going to end up having a level Playing Field. I dont want to say anymore than a level, but if the Playing Field were slanted like had a little bit toward us, i would accept that also, okay [ applause ] and President Trump speaking at the white house as part of make America Great week, but in the meantime here, as were seven minutes past the close of the markets on closing bell here with the dow dropping slightly, no major gains theres some big moves after hours in netflix those earnings are out the stock issing po. Lets get to Julia Boorstin with the details. Julia . Reporter hey, kelly. Netflix shares are soaring higher on better than expected subscriber editions. The company added 5. 2 million subscribers in the Second Quarter. That is far better than expected, both in the u. S. And internationally. They added 1. 7 in the u. S. Versus expe you see the stock up 8 . Going through the revenue numbers here, we see Revenue Growth of 32. 3 to 2. 79 billion. Thats a hair stronger than expected earnings per share coming in at 15 cents thats exactly what netflix forecast last quarter, but it is a penny less than the thompson analyst expectations q3 guidance is very important. Analysts curious to see if the company can maintain its expectations revenue guidance of 2. 96 million also better than expected. Analysts had been expecting about 2. 88 billion, so that 2. 96 billion in revenue for q3 better than expected, and net income for q3, the company is forecasting 32 cents a share versus analysts expectations of just 23 cents per share, so it looks like the company has had a slew of new content, and and the guidance is very strong and they are talking about how this was a record 5. 2 million in the quarter, bucking the historical seasonal patterns. Q2 is normally quite a light quarter for subscriber editions it, and now another key fact here, the International Segment now accounts for over 50 of the total membership base, so a Tipping Point there for netflix in really becoming an international company, and they also say that as a result of that more international base, they expect positive International Contribution profit for the full year of 2017 thats a first for the company as well. Kell de, im going to continue to dig through this letter here. All right, julia. Great stuff, thank you. Netflix shares up 7 , always a big mover on earings next to me for reaction is cnn jon fortt along with danny hughes and mike nakani also here, the ceo and founder out in san francisco. Jon forth, what do you think reporter potentially a gamechanging quarter in that q2 is supposed to be the snoozer. A year ago this was the big disappointment quarter when it came to subscribers. This is just at blowout. Over a million net adds domestically when the street was expecting half that and really Strong International numbers as well its interesting the way netflix draws comparisons between it and other videoondemand players. In this letter saying the competition is always intense. The Silver Lining of the market is vast and diverse. Youtube is earning a billion hours a day of consumers times. Were getting a billion a week, but, i mean, of course, netflix has a different kind of premium content, and they say thats hock theres lots of room in this space for lots of different players and lots of room for netflix to move higher. I can remember a past letter where he said sleep was the biggest competitor because there werent enough hours in the day for all the content. What do you think of tnetfli . I have owned it and dont own it now the unbrinkable kimmy schmidt, some amazing names you cant get away from netflix. You have to be a subscriber. The subscriber numbers are a tremendous flow. And the fact that the international piece is now over 50 , i think that that could grow tremendously just in terms of, you know, the size of the u. S. Michael, this is as company when it had a little bit of a hiccup in subscriber growth numbers, we want people to focus on the Global Operating margins. The guidance for the quarter a little above where wall street was. If we look at the earnings piece of this this, if you take the 32 cents that they are going to earn next quart and multiply that out, netflix is trading its next six months of the eps not how the analysts would look at it, but its still a highly valued stock, isnt it it is, and if analysts are looking at it that way, i think its a bit concerning, but, you know, i think whats really going on here, kelly, this is really a clear indication that the cordcutting is continuing, whether its Amazon Prime Video, whether its youtube, whether its netflix, and even the new offering from hbo. This really is changing the game, and i think this is almost a dvdtostreaming sort of moment when subscriber growth is this strong, i think the trend is really starting to take on hold. You mentioned dvdtostreaming which for this company was a huge deal, you know when that happened it dramatically expanded. Market and then they werent sending you dvds in the mail, they could offer you all types of tv shows, you name it what do you think now is happening, as people are cutting the cord and theres more competition than ever, are you saying were at a pivot point in which well look back a couple of years from now and nobody is going to and, you know, everybody is going to have netflix . They reach about 50 million u. S. , can they still get 60 to 90 million i think they can. I think amazon, for example, just think about the adoption rated of amazon prime. I do think it is an infliction point. I really do believe that youre going to see Cable Companies just like youve seen home phone Service Really start to be negatively impacted regardless of whether its hulu plus or youtube or netflix i think this is really a moment we need to all really keep in mind when you have this big of a blowout, its a big, big deal. So, jon, were all grateful since we work for comcast that they have a pretty strong Broadband Network where you can watch netflix and if you have xfinity you can watch on your box so to speak. What do you think is happening thats the flip side of cordcutting, right, that maybe theres one side of the cord you dont need as much but the second cord, the broadband cable, you need more than twice as much. Theres an extreme amount of demand for content coming over that cable, and i think theres a real question of where the profits will accrue in that environment. Clearly netflix becoming the major player in that environment as far as premium content that customers expect to get. I think this also raises some issues for the apples, the googles, the amazons of the world. Amazon has invested in original content, and its clearly in the game, but if youre google with youtube red, especially apple with the really nascent video efforts, you have to think is it really worth trying to jump in and spend the billions upon billions it will cost, and not just that, because they have the money, but the time and experience it will take to compete. Facebook, too. They said they would have a documentary about the ball family i saw lonzo ball play last night, okay, im watching summer league, the ratings they are getting on this stuff so they might be on something there, but can all the competitors sustainably take on netflix, and can netflix stay ahead of them i think when net. Ics talks about competition and says theres plenty of room for competition, its in their benefit to say that because they are in the lead. If youre one of the followers who have to spend that extra money and effort and time to try to catch a netflix, this is one of the moments when we saw facebook separating from twitter where you have to think is it really worth it, and how does the landscape shape now . But as a consumer you dont have to choose you can have netflix, but its not as much as a cable bill. I dont know. If you actually add together what is netflix per month in the. 10 or 15. Whats hulu its about 8 a month. And then you throw in like a youtube basic package, like 35, or dish or directv. You get prime and all that have content as well and youre not spending as much as youre spending on a 100 or 120 cable bill youre not getting that content. If you dont spend it on the cable bill how do you spend for the broadband . If the Internet Connection is 80 a month and you slap a couple of subscriptions on top of it youre still paying the 30 but its not the 100 bundle with hbo and all that have. So all of that have said if its been in netflix in the past in stocks, all the trends potentially working in their favor now. What does it take for you to want to be a holder of this company where its trading at about 145. Im a catch the knife kind of girl im not chasing something. 175 . Right its up 8 now, 1. 5 i dont chase companies. I think that eventually something will catch up to netflix like everything does maybe it wont be netflix specifically, maybe sectorfocused or the entire market that will go on sale and perhaps well step in and like valuation. Like they are trading with amazon and apple. Same thing people were saying with amazon. All the way. Right. Waited a long time for that knife to come down. Hang on one second, everybody. Soma mody has breaking news on tesla. Whats happening, seema . Reporter two updates from teslas board. Linda johnson of Johnson Publishing company and ceo of Ebony Media Operations is joining teslas board. Another addition is james murdoch, ceo of 21st century fox, also the son of rupert murdoch, also being added to teslas board. Keep in mind, kelly, there has been ongoing criticism of tesla, how their board is being stacked with insiders, so these two updates could potentially add more diversity to itsleadershi change right now were looking at shares of tesla basically unchanged at the moment. But, again, two major announcements there. Back for you. Thank you, seema. Michael, anything that you draw from these nominations no, not really. I think that they are really just trying to get additional diversity maybe to satisfy some hair shareholders. I want to go back to something that jon said which is if you have netflix with such a huge lead at this point, spending massive amounts of money in production, what is it going to mean for Companies Like apple . Well, in our view, ale, particularly given how stingy they are in terms of spending money, i just dont see any way, unless they go out and buy somebody which i dont see also, i dont see any way that they are going to be able to compete with netflix on the video front. Music maybe, but video, i just think on netflix is separating itself from the pack. Meekal, exactly what you said, sun valley just concluded these appledisney rumors make the rounds about every other day at this point, but if they look at these numbers and what youre saying and its important for them to be in video, whats the hanes . They just hired, the sony guys to build out some that have programming . Yeah. Can they do this from the ground up . I personally dont think its as important as everybody think that apple is going to go into video, and i dont think apple, at least based on the behavior ive seen thus far, really has indicated they are going to make a strong push to video they are going to do something they hired the sony people to try to jump start their efforts, but about, i mean, how do you compete with the 40 new shows that netflix is coming out with . They are the 25 new shows that amazon is coming out with . I i think the advantage that apple has here, that we tend to forget, apple tv, never actually built the television that everybody was hoping for, but they have this apple tv box which is a key point where the premium video ondemand subscribe remembers getting this netflix content. I think the key question for apple is can you build a moat around that tv experience or not . They used to have a moat around music. They will have the apps there. Which speaks to apples strength in this area. Amazon had to be on it amazon staying on for a long time and now they have to be there. If its apple, used to have a moat around music because of the digit a. M. Rights management, somewhat of a moat around video because itunes had video, too. Now youve got netflix and amazon providing that across platforms. Can they provide a et ber experience yeah. I think the pressure is on them to maybe revisit that. Weve got to go weve got to go. Danny, are you a holder of apple or no . I am and have been for a long time and got back in when it dipped below 100. Thats a comfortable place to be. Thank you all for joining us. Always good to see you john is going to stick around. Well talk more netflix. Not done with the company. One investor ignored the message about the streaming cash flow and focused instead on investment in original content and how that will pay over time. That next. Mean times, shares of shake shack were taking a dip on word that chef bobby flay is offering his version. A look at how theinio may fare and reach out to the show. Contact us on twitter, facebook or send us an email at closingbellate nbcunii. Com youre watching cnbc, first in business worldwide ught in my co, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Welcome back netflix shares jumping to a new alltime high in Strong Revenue and guidance and trading around 175 after hours 8. 5 gain. Lets get back to Julia Boorstin who has some of the content helping to drive growth. Julia . Thats right, kelly reed hasting saying in his letter to shareholders they are trying to please a diverse taste for content. Unfortunate events as well as a number of other shores including the Santa Clarita diet shows how eclectic the shows are the launch on the last day on q1 was a big driver of interest certainly in the zeitgeist they also marvels iron fist which debuted on march 17th has become another highly viewed marvel series. Another one of those is coming up, the defenders launching later this year. Trying to combine the success with marvel. They say they have been investing for standup comedy and the Dave Chappelle collection, one of the most viewed comedy special ever, and theres more details here about how they are trying to invest more in film Rita Hastings saying they are open to supporting the change if they want to offer a film such as the upcoming will smith in theaters simultaneously and let consumers choose of course its been a big issue for theater chains and the movie industry wanting to bring out movies on on, you know, Home Entertainment closer to when they are in theaters he does weigh in here on competition and the rise of skinny tv bundles, such as the ones from directv now, hulu and youtube. He says that he believes these virtual mvpds, the virtual cable channels, will be more direct competition to the existing cable channel and the additional bundles will not threaten t. Netflix they dont expect much impact because they are focused on the ondemand commercialfree viewing. No commentary here in this note about whether they are planning to get into live based on this it sounds like they want to stick in their lane and focus on that ondemand viewing kelly, back over to you. Julia, thank you. When it comes to the movie piece of this they support that move to stream it yeah. Netflix recently hired a big hollywood executive and they had a number of films that were direct to netflix in the quarter including war machine with brad pitt. Netflix would like these to be in the Movie Theater the day they launch on netflix the big chains have policies about having them exclusively in theaters and not wanting them on netflix to weeks or months later. This has been a real clash and Reed Hastings doesnt hesitate to pick a fight with the theater chains saying let the consumers choose. Julia, thank you. Well ask our guests about it. Jon forth is here and joining us is kevin landis from firsthand Capital Management and robert lewina welcome to you all ross, where i was going here is theres this fight over whether movie studios should release films into peoples homes. Netflix seems to be saying were already shoving movies, in some cases in peoples homes. We want them in the theaters can there be a melding of everybodys minds down the road . Its not a choice the Cable Companies didnt want to play the game with a la carte offerings and they are losing subscribers to netflix and now thats happening to theaters look at imax stock which fortunately we exited before it declined, the Movie Theaters are in serious trouble right now the actual behavior of consumers have changed and they are going to attend films in the theaters and the theaters have no choice. If they are smart, they will put netflix movies in the same day that they go in online streaming and they will get with the program and try to add value through the experience, because any way you look at it if they dont put the movies in the theater, theres better and better movies and the only loser is the theaters. And that makes a better argument if they are trying to avoid that happening. Kevin, youre a longtime netflix shareholders what do you think about the quarter . Absolutely. Great quarter. I think thats a good example though that its not any one quarter that makes the success its this relentlessness of growing their base and getting more and more resources in this is a snowball that just keeps rolling. Robert lewina, whuna, what a . It was a tremendous quarter its been a magnificent performer and hard to u. N. Estimate that, and if you look at the last 16 months the stock has doubled. For the stock to do that again, all the talk about original content. Remember, another double puts this to a is similar market cap as a walt disney this is not a walt disney so if i was a shareholder its a great opportunity to exit the stock. Too much for this valuation. Robert luna, can they build amusement parks and why cant this be walt disney . They can, obviously they can do all those things, but theres a lot of capital thats required to do that, and unless netflix is able to extend beyond its core offering, you know, the current offering just doesnt justify the valuations kelly, you had a previous guest who is saying let the consumer choose they can have hulu and youtube and can have netflix because its cheap well, youve got to remember a big part of the story for netflix is International Growth and when you look at a country like india which is expected to be the second largest Digital Consumer in the next three years, the average Household Income there is 1,500 a year. They are already way price above amazon prime and they are not going to win in markets like in a. John . Kevin landis, in a way the easy decision to make is the binary yes, netflix or no, netflix if youre an investor. I wonder your take on the ecosystem we should expect to develop around netflix its one thing if you are correctly able to surmise that android would be big but the real benefit is the investor who found out that samsung would get most of the profit out of android so if we assume that netflix is going to be a big winner in the video on demand space, who else should we expect to succeed well, theres an ipo coming and a company weve invested in called roku. Its a netflix spinout, and they stream more than anybody else, and and rokus Search Engine is better than the google Search Engine if youre trying to find programming, so thats one way to go. You know, its its i could go all day with all the companies that are out of position with this migration towards cordshaving and all that there are very few Companies Lined up as well as roku and netflix. Thats an interesting point. Yeah, this is great for content creators like disney, lions gate. Whats happening in hollywood right now is like the gold rush weve never seen with all the people wanting content youve got the outside players like facebook and apple desperate and the inside players like netflix and cbs who are doing great shows. And so and hbo, so if youre making content and youre making good content, youre going to be able to charge more and more and youre in great shape, and i really think the people who are looking at disney only based off of espn are missing the huge thing about disney which is childrens content is whats driving netflixs future, and last point i want to make is theres a billion people in india and right now only a few million have netflix, so if you think that netflix is even close to the surface of being done growing, youve got to travel more, because this world is vast and used. Weve got to go jon forth, ill give you an opportunity here if theres Something Else to focus on. The thing to focus on here is broadband because thats absolutely the pipe over which netflix distributes everything, so who is able to really capitalize profitwise on the distribution of broadband . What are the rules internationally on who gets broadband and at what price because thats a gating factor they should fund the worlds rollout. Fighting net neutrality. Guys, thank you all. Again, netflix shares after hours trading at an alltime high time now for fast take and joining me today is a very special guest. Hes guy adami from fast money which is only appropriate, guy, because this is fast take. Welcome to you. Thanks for having me, kell. This is great. We miss you first one up, count inter vest as one of the private equity firms that have lost money in fact, they were a 2 billion energy fund and lost it all thanks to poor oil prices. What does that tell you . Poor timing and leverage. What does that call. Its called being wrong, wrong, wrong people say they dont ring a bell at the bottom remember when amarinth blew up, that marked the low for gas. Will this mark the low for crude oil . Thats one way to look at. First grasso, now you. Elon musk tweeted his stock is a good value if you believe in its future, and that seems after weekend comments seemed to indicate he found is undervalued. Today reports said a recent crash may have been caused by its autopilot. Shares are down 2. 5 you know what we say, growing pains, thats what i say, kelly. When youre elon musk you have the luxury of being glib my stock is too rich, too glib, and thats what being a stud will do for you, and were about to talk about yet another stud when youre about to ask me about netflix which by the way Reed Hastings stud, next i wanted to say that. You got that in lets talk about another stud, ubs says amazon could now be worth 1,600 a share in the upside and amazon is working on a messaging app called any time. What do you think of that . What are their ambitions in communications, messaging, and this is over 1,000 again today . Godfather fan, just say yes. One and two, potentially the two great movies at all time at the end of godfather 2 played by Robert Duvall said mikey, youve won. Youve killed everybody. Whats left . And michael sits theres eating an orange and he says, you know, i dont want to kill everyone, just my enemies and thats whats going on with mr. Jeff bezos. You see the guy hes jacked. Looking to rip everybody. Are you saying facebook should be worried if hes going into message, byebye facebook i dont know about byebye facebook this is a World Domination and hes playing the game and not only is he skipped for it in terms of financially, now hes equipped for it in terms of physique which ive got to tell you, hes an intimidating dude you saw the pictures. I saw them. Back in brick and mortar land theres a bankruptcy wreaking havoc, the Alfred Angelo Bridal Stores that suddenly closed last thursday night with no warning leaving them with no help dealing with brides and bridesmaids desperate for dresses they have already paid for. Has amazon launched a wedding shop yet ill get a lot of hate mail on this one. A lot of brides to be and grooms to be go to bed at night and say, lore, just give me a sign is this meant to be or not meant to be . No, stop. What does that have todid. Maybe its a sign instead of saying yes to the dress they should have said no to angelo, man wasnt getting it done. I thinkyou should start a fund to help, recompense those who have been left in the lurch by this bankruptcy. Okay. Its a little joke can i not trust my local shop because i cant even count on six from nine months i can get my brides dress two words for you, say, guy im ready. Im ready vera wang there lug. Just go go there and get it done some rand om thursday, she not closing up shop. Pleasure. Well do this again guy adami. Much more of him and the rest of the fast money crew coming up in a few minutes they will be joined by netflix cofounder mitch lowe who reveals the one thing Reed Hastings should be doing to compete with major hollywood studios. Lock how the platinum cards, citi is upping the ante. The latest salo in the Premium Credit card battle thats coming up celebrity chef bobby flay is hoping hunger keeps up as he eyes an ipo for his burger chain. Up next, well look at bugger and the ipo markets, and netflix shares are jumping after hours they just posted earnings with Strong Revenue and trduaerhiqrt guidance well look ahead to the 6 00 p. M. Earnings call coming up you too, unnecessary er visits. And hey, unmanaged depression, dont get too comfortable. Were talking to you, cost inefficiencies and data without insights. And fragmented care stop getting in the way of patient recovery and pay attention. Every single one of you is on our list. For those who wont rest until the world is healthier, neither will we. Optum. How well gets done. baby crying fly me to the moon elegant music and let me play bell rings or a little internet machine . [ phone ringing ] hi mom. It makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. See how much you can save. Choose by the gig or unlimited. Call or go to xfinitymobile. Com introducing Xfinity Mobile. A new kind of network designed to save you money. Welcome back senator john mccains medical condition will delay a vote on the gop Health Care Bill this week beyond his absence, the fate of the bill may still be in doubt Kayla Tausche has been tracking this for us. Reporter i actually have breaking news at this hour were getting some details from the office of the u. S. Trade representative who is going to be spearheading the nafta renegotiation that he says will be beginning no earlier than august 16th, so just about a month from today the ustrs office reiterates a desire to improve the u. S. Trade balance and reduce the trade deficit with nafta countries they want to maintain, if not improve, access to Industries Like manufacturing and agriculture and Services Specifically on services there are objectives to promote crossborder trade in things like digital media, telecoms, Financial Services and data. That is new. Remember, the administration has been talking about modernizing this agreement, bringing it into the 21st century, and those are sectors that could potentially benefit from this specifically a couple other points, kelly, there is a provision where it says they want specific protections for Small Businesses that are trying to navigate crossborder trade and finally they are seeking a mechanism by which to enforce anticurrency manipulation, something the administration has talked about quite a bit and that language could be very interesting Going Forward as these three sides in about a months time try to work out some of the nuances. Kell yeah, theres nafta, too, not just health care, kayla, and then theres the maid in america week by the way with what youre telling us about nafta, where does that leave the progress on the renegotiation . Well, it is roughly on track. The ambassador, the u. S. Trade representative inmakers notified congress of the intent to open this 90day window to figure out exactly where the interested parties in the u. S. Stand on their negotiations stance, so were just about a month away from when that window closes at which time the three parties, u. S. , mexico and canada are expected to get together and figure out exactly what this deal looks like Going Forward, but, kelly, it it its an ambitious task commerce secretary wilbur ross wants it done by the end of the year, but trade experts are saying thats extremely ambitious and highly unlikely. All right kayla, thank you at this hour kayla touchy in washington. Celebrity chef bobby flay has a new offering and its public the restauranteur announcing plans to take its burger chain public they currently have 17 locations, mainly in the northeast. Is this the right time for him to go public lets bring in our leslie bicker along with r. J. From morningstar. R. J. , let me begin with you in terms of if youre coming at this from a restaurant point of view, is this a good time to bring a burger chain public . Depends on your situation a lot of restaurant chains are seen as being insulated from amazon seen the franchise and the asset light models at multidecade highs in terms of relative multiples. That said the smaller chains that dont have the scale, you know, that might not be the best time, you know, to do it because youre finding ways that amazon is disrupting the business, smaller chains and overall traffic is down in the restaurant space id be a little wary with an offering like this. Yeah. Were showing some of those other competitors, sheikh omar abdelrahman, buster davids. Is this a confidence listing . How is that going to work . Its a unique listing, regulation aplus which essentially makes it easier for the Smaller Companies to go public it really only works for a company like this one that has a lot of consumer awareness, consumer understanding because it relies on both qualified investors and average joseph to purchase shares of this. I actually looked on their underwriters website so you can buy shares for at little as 600 anybody can do it. Wow have you leslie, have you trade ive not been ive never been, but i hear theres like a crunchy burger thing that everyone raves about. Kelly, i have not either. There is, theres crunch to it we were actually able to pick up one of these burgers, and, indeed, there are potato chips on this burger as well as cheese, lettuce, onions, but a its a good point. I have not tried this burger, youve not tried this burger but a deal like this for bobby flay could be beneficial in terms of generating publicity for the company. I know. Now you have an opportunity there. I mean, its looking you in the face r. J. , is this enough for them to you know, shake shack probably did it at exact the right time with all the hype behind it and the unique knave of the story there if bobby flay says, you know, i want to do this for my fan, i mean, thats hes not only counting on them to keep trafficking his stores they are going to be doubled down if they own shares of this business given how poorly some of the rivals have done. Yeah, again, im a little bit wary on that and i dont think putting your chips on a burger will be enough to differentiate they will selves from a very crowded space. I like Loyalty Programs and more sustainable parts of the business a lot of the qsr guys, guys doing that, thats how you differentiate yourself that strikes me has more of a fad, kind of a stretch at this point. All right ill tell you after i have the crunch thank you both, r. J. Hottovy and leslie picker. Netflix shares tring ghadhier and more on the conference call. Stay with us [ intense music playing ] its here, but its going by fast. The opportunity of the year is back the mercedesbenz summer event. Get to your dealer today for incredible onceaseason offers, and start firing up those grilles. Lease the e300 for 569 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. 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, cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Welcome back, a 10 gain, 1 10. 5 after hours for netflix after its earning beat and strong Third Quarter revenue and guidances. Also user growth came in better than expected. For more on what to hear for in the Earnings Call this afternoon, lets bring in Michael Graham michael, lets get right to it, three things youre going to wibe listening for when this kicks off in an hour netflix had a strong quarter. First, any upcadates on can the subscriber momentum continue for many year to come . Good performance in the quarter. Also good guidance thats important the second thing is just any color on some of the cancelat n cancelations of shows they had during the quarter they did pull back on shows like the getdown and a couple others so well be looking defor details about the reasoning behind that. Yeah. Finally, profitability. They disclosed theyre going to have profitability for the International Segment this year, and thats a key factor as well. Whats your price target on the shares now well, it was its 175 now. We obviously have to go back and relook at our forecast again were going to be raising some numbers most hikely given the momentum and the guidance and then, you know, were going to go ahead and readjust that yeah. Were three bucks over that level. Michael, thank you so much well let you go thats michael fwram. Meantime, the city prestige is getting an upgrade. New card holders get a 75,000 point signup bonus after spending 7,3500 500 in the firt three months updates to the hotel benefit and the new card will be met metall metallic will it make a dent in the Credit Card Rewards war . I shouldnt tell you, i dont think i have any points anywhere, brian. Oh, no. Come on. I know. For years my uchkncle, hes amag at it. Im not there. Please explain this seems like it has a high spending threshold to get the rewards. How does this compare to the chase sapphire card and others the sapphire had a 100,000 point bonus. That ended earlier this year down to 50,000 point as far as 75,000, its the highest signup bonus in the category although the 75,000 bonus the spend requirement is pretty high clearly citi is going after premium customers who can spend on the car and not gamers who want to get it and close it. How important is it that its made out of metal, brian you know, metals all the rage its actually i have one with me its actually a little bit less heavy than the amex platinum and reserve cards which is actually good because my wallet is getting heavy these days with metal cards. I hope that didnt have your number on it. No, it didnt. Thats like a blank, a show card interesting that they do this fourth night free for hotels as well that was an existing benefit so, now that the sapphire reserve card no longer has that signup bonus available, does this mean this is the goto card or who else is in the game you know, each card has its own benefit. This fourth night free benefit is insane, though. You can get the fourth night free of pretty much any hotel in the world, even a president ial suite. For me, alone, last year i saved i think over 6,000 on this one pe perk its amazing each card offers different benefits amex platinum is the leader when it comes to lounge access, but if you like hotels and experiences, citi has a really, really strong offering. Well, if you save six grand, i guess that makes the 450 annual fee worth it. Can they keep jacking the annual fees up if the rewards are going up, too . They havent increased the annual fee amex did citi is keeping it at 450 250 in freer a far er r a fare for the different perks and fourth night free benefit, its an absolute no brainer. Youre a mercenary, right like the second someone else you close down the card entirely, is that it no, i mean, i keep the cards as long as they offer me value, if you got a credit card thats not offering rich rewards or really strong perks, then, you know, you really should consider changing and, you know, the signup bonuses now are the highest weve ever seen. So its a good time. Especially for you if youre looking to get a rewards card. Apparently i dont know, its like buying the market at alltime highs brian, thank you for joining us. Thanks for having any. Thats brian kelly. Break out the dancing girl in a red dress its world emoji day up next, how the tiny pictures changed business communication and whether or not its were the b better stay with us welcome back from smiley faces to hearts, to pizza, emojis have taken over interpersonal communication, but its not limited to just text between friends. Eric is here with a look at how its also impacting business in a big way. Thats right. It sounds ridiculous because were here talking about world emoji day, but heres the reason why. First off, its july 17th because thats the day in your iphone the calendar says july 17th, thats when apple in 2002 launched its product thats the birthday of the calendar thats the birthday of emoji day. So, look, emojis reflengt tct te changing nature of communication for people and businesses. Went from phone to email, to email to text, now were going from using real words and language to visual pictures. Consider on instagram the majority of people there use emojis right now there are officially 2,666 emojis in the unicode standard that work on any phone and countless introduced by companies, brands, celebrities, you name it. Corporate examples, dominos lets you use them to order this sta. Chevy put out a press release in emojis left for people to decode Goldman Sachs to highlight a Research Report on millennials twitter charges people a million bucks each to get customized Emojis Snapchat turned 100 million for a pane that turns your face into an emoji Academic Research shows if you use emojis in sting youre more likely to get a response back. Were sir round urrounded. I was telling the people the wrong thing, i said this is when emojis launched. This is when ical launched. I saw july 17th i thought, oh, it shows everybodys birthday. Right. It turns out, i sphave a spel extra special one. Remember when it was emoticons, do the colon and dash. Those are dead. Its no emoticon movie. Microsoft outlook, i want to use emojis all the time when im emailing people very frustrating. Thats a technology they need the people we know working at microsoft, get the emojis in outlook. We know someone who has a birthday today, in fact. Eric, thank you very much. That does it for closing bell. Ta fast money begins now. Fast money begins right now, overlooking new york citys time square, im lisa lee. Pete najarian, guy adami shares getting crush today after another blow from amazon which stocks can escape the wrath of the ecommerce . Plus, Tesla Ceo Elon musk talking about his companys high flying stock over the weekend. What he said that put investors on edge. Later, netflix reporting earnings moments ago the cofounder of the streaming giant mitch lowe will join us to tell u