Transcripts For CNBC Squawk On The Street 20170718

Cramer and david faber. Netflix surge. Stocks open higher as a big beat. Shares of Goldman Sachs are falling in the premarket despite what was an earnings beat. Dropping plans to replace obamacare. What that move means for the rest of the trump agenda, issues like taxes and trade first up, netflix is poised to open at a record high. Sub growth coming in much better than expected in the Second Quarter. That news overshadowing the earnings miss. Reed hastings on last nights Earnings Call. Anything notable beyond 5 million net ads in q2, alltime record for q2, up sequentially from q1. I think were seeing the rewards of doing great content, focused on the quality of the service are paying off. More than 1 million added in the u. S. Alone estimate was for like 600 k. People are wondering whether or not the shows are pulling subgrowth demand forward well see. I have to tell you this is one where i really this was a joyous Conference Call it was a great presentation. I found myself uplifted. I come back after a hard day and get on this call and i just like it i like it, because its about how they have figure d out a way you dont get to be thanked for nothing. Facebook figured out how to use the internet to tell a personal narrative. Google figured out the internet to be able to do youtube short form these guys figure d out the internet by being able to produce content that is loved in korea and loved in brazil and loved in europe and they have got this machine and then once youre in, its all about Artificial Intelligence they have what you like. And they will continue to make what you like. And i just thought it was a Tour De Force Conference Call theres a great moment in the Conference Call where they completely and utterly dismissed that it was like, hey, guys, stop stop it. Its a setup call. But what i liked about that they said cool it stop asking questions about our cash flow. Its not what the focus is the focus is how we keep signing up people. And then once they want to if they wanted to start making it so the five people on my account started paying, they could do it at one point he says, listen, 8, eight euros, Everybody Loves it thats what i like about a call. Totally lacking in rigor and yet brilliant in so many ways. The fact that they did raise their Free Cash Flow burn guidance for the year to 2. 5 billion. Youre just going to go there. Anything you see in the analysts notes, you speak to anybody about in the slightest way. Otherwise, everybody is they have pocket protectors these analysts this was about a korean movie ive got to go see buster cohen a reviewer over at the street i said i need these movies watched. They are doing production that makes you sign up. David, once youre hooked, its opium. This is intellectual opioid. Its a good kind of opioid crisis. Worldwide. Not the horrible one that has a lot of people in its grips in this country. I didnt mean you brought us there. Really you have to make a reference to that . Its a metaphor didnt you ever take that course couldnt you have gone somewhere else, something nice its like milk and cookies for everybody . Its like chocolate milk did you even listen to it it was so beautiful. About cash flow he said business as a whole is what makes us comfortable. We should continue to invest, be able to finance t debt to market cap is incredibly low and conservative more draw on free cash, negative free cash will be an indicator of what . This is a good question, mr. Jeopardy head. Negative free cash will be an indicator of what . Future growth. Enormous success you cant beat this. Right now theyre in their graves talking to each other, whatever enormous success its brilliant the only thing people wonder, its not like they always had cash flow this negative. No. Only the last couple of years. But, you know, to quote clark gable, frankly, my dear, i dont give a damn. I just love this were doing amazing work in product, make it easy to use, fast, fun. In marketing were just improving around the whole company, growing what we have. Were very excited about what weve accomplished but whats ahead is also super exciting thats what i hear you. And your enthusiasm is being matched in the marketplace by investors. Right. All those analysts who are taking their price targets up. A company that has, what, 104 million global streaming subs, reaction el rated its growth. Now youre talking. A market value, by the way, that is larger than fox and viacom together. Babe ruth versus, what . Who is having a better year. And the only other question is do they pull forward because of the success of some of their new series do they pull forward some subscribers who otherwise would have shown up a little later in the year oh, geez. Im just saying, man. You really want to go there, huh . Ill go there. Just got to try. A bit of reality. Stranger things have happened. Ouch. That hurts. Yeah. Stranger things. Blow on it. Each posting better than expected quarterly results, both reporting decreases in trading value. Lloyd blankfein said a mixed operating environment persisted in the Second Quarter as conditions continued to support underwriting of m and a while constraining certain Market Making activity. Lloyd, stop paying lets take them apart. They are making way too much money. Same time i didnt think there was anything special about still got 180plus book value. They need more volatility. In the same way i thought bank of americas quarter was a great, classic, grinded out quarter. I like that stock very much. Sure, that was because the long bond traded where it did i think bank of america distinguished itself as being a company that is 500 basis points of operating leverage of which i like to hear that. They are making more money per customer added a lot of mobile customers. Theres nothing to dislike here. No. Recent dividend increase, capital return plan being improved, warren buffet now, the largest shareholder. Ibm, speaking of a buffett name actually, its not really. Youre way ahead of me way ahead of me. As for goldman what did they buy back they still bought back, what, 6. 6 million shares at an average cost, about 1. 5 billion of stock. They still trade above book. That roe for goldman was 8. 7 . Consumer bank, bank of america, goldman earns 90 of what the bank of america earns goldman is great for but bank of america is this national juggernaut it keeps grinding. Its not going to overpromise and underdeliver Brian Moynihan has not come through the other side you get another 3 billion. You do but the concern this morning and the reason the stock may be down is they worry that you need the long bond to trade in wild directions intraday for goldman to do well and you need the long bond for Interest Rates to go up for bank of america to do better. This is not like orange is the new black. Right its no house of cards. It is no house of cards. Glad you mentioned that. That was a house of cards share quarter and people dont get that. Steepest decline of the big bank so far . No, its not. The fixed income guys, if i were there, i would be like, guys, im sorry. I didnt mean it equities did quite well. I was surprised how good equities were. Meanwhile, yesterday, in terms of the markets, the weakest volume for a full day of the year is that true . Just over 5 billion shares. Intraday range on the vicks was the smallest of the year the environment that theyre discussing for the seventh quarter kind of rolls on, doesnt it almost like they have this markets group that does small loans since they got great growth. Moving the needle for a long time. I feel like if youre goldman you just need a lot of activity. I would love goldman to have something thats i like bank of america thats got this giant deposit base doesnt have to do anything. You know that deposit, thats whats going to matter. Merrill lynch, too. Sometimes we dont talk about. Still significant contributor. The long chart also really good did not have a problem with credit cards some companies are having problems with credit cards a lot to like here Brian Moynihan himself is not that exciting. I dont really want an exciting banker im still reeling from the can cursing on the jp morgan call. Why is that an x rated call . Very upsetting to you, wasnt it affected you deeply. Didnt need to curse. He had to make a statement because washington is everything that hes saying, right . Speaking of which, theres some debate this morning about this Health Care Bill. Repeal and replace essentially is gone after moran and lee come out against that, straight repeal with a twoyear delay now the spin is, well, they get that out of the way somehow tax cuts become more likely because desperate gopers want to win. Dont want to lose a lot of benefits so lets delay t i have an antidote for that. United health, a huge winner in this situation in the stalemate. How is the number it was beautiful. The whole thing medical loss ratio. It was a sweet quarter. It was a very, very good quarter. I think were done talking about i like to rely on cheryl skolnick. Raided their office she said buy, buy, buy. Right call a really solid can quarter cash flow is strong. I just didnt see any holes in this one they trounced the quarter. Nice, nice quarter. You like it. Unless its netflix. Then you get so excited it was a great play the ice man cometh i want something punchier. The producers. And netflix delivers the producers. Funny. I am a Tennessee Williams fan, actually. Oh, my. Wait, the ice man cometh is oneill. Its a terrible play. You have to read it in school. I think that netflix i saw kevin spacey in it, actually in the ice man cometh. Kevin spacey is very good in which brings us back to house of cards. Maybe he will win the emmy this time. So many nominations from netflix. But its still an Artificial Intelligence story people dont understand, theyre happy having you pay 8. Once they have the info on what you like they can give you exactly what you want. 42 movies for me i have no other time than to look at amazon to see that they still got these wing tips they want me to buy. Erase 2. 5 billion on market capitol somehow. Amazon shirts, then i realized they were button down i like the french collar 35 bucks a shirt. Speaking of retail, still to come this morning, ceo Kevin Mansell. Well hear his plan for growing the retailer and battling amazon well get to harley with a pretty deep Production Guidance cuts, some misses in the furniture business take a look at the futures more squawk on the street. What should i watch . Show me sports. Its so fluffy look at that fluffy unicorn hes so fluffy im gonna die your voice is awesome. The x1 voice remote. Xfinity. The future of awesome. Some pictures to show you. Alibaba jack ma hosting the u. S. China Business summit in Washington Well monitor that the mission here, they say, is to discuss Economic Issues of mutual importance to both countries. Its so interesting any minute were waiting for the steel tariffs on making it a National Defense industry asset. Jack ma has kind of reversed things and is seeking to empower the small and medium sized business here in the u. S. That wants to sell to the Chinese Consumer using the alibaba platform and he also got a nice new haircut. Yeah, he did get a haircut. Both those things going for him today. I was more focused on what he was saying youre absolutely right. After my netflix analysis, we have to default to things that are not necessarily earnings per share. I am concerned if this steel tarrive comes through, you are going to have major blowback south korea, our friend, trying to negotiate with north korea. It would be a blow against south korea and against china. There is reporting, not ours, that there is blowback in the white house about that gary cohn is against it but wilbur ross, navarro and bannon are the proindependentponents. Its a big split. Morgan stanley comes out today and says bumping second half steel prices, no way you can bump second half steel prices unless the government gives you relief this is all based on the fact that a lot of wall street thinks its going to happen. Speaking of manufacturing, its made in america week, as you know the president was touring the cat machines and fire trucks yesterday. Cuts their shipment forecast 241,000 versus 262 a year ago. That was disabling. A bunch of hogs on the white house lawn they tried to put a good face on that quarter there really wasnt anything to demographic story, millennials i got a lot of blowback myself when i mentioned. My friend, Michael Hayley took me to their really fabulous store on route 10. I think i lowered the age of the people shopping. Thats hard to do. I didnt need to it was meant to be self depricating. Yeah. What did i say it was a joke. Youre supposed to say oh, come on you dont say wow. You know i think youre the fountain of youth. Come on. My god. Still still. I just look, i just think that harley, in the end, is a story where were going to focus less and less on it. Just because it has a business that is aging. Im not talking about that this is suddenly its not like sunrise senior living. Never even got to Johnson Johnson. Want to do that in the mad dash . Well get deeper on jnj in a moment, cramers mad dash. Dont go away. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. To keep our community safe. Before you do any project big or small, pg e will come out and mark your gas and electric lines so you dont hit them when you dig. Call 811 before you dig, and make sure that you and your neighbors are safe. 811 is available to any business our or homeownerfe. To make sure that you identify where your utilities are if you are gonna do any kind of excavation no matter how small or large before you dig, call 811. Keep yourself safe. We are back now at the opening bell Johnson Johnson also reported earnings a fairly Large Company we havent really mentioned it as of yet. Weve seen the same pattern over and over again with jnj everybody buys the stock up three, havent looked through everything next thing you know, the stock is down. Why . Because people look through and say maybe the stock has run already in advance same thing playing out exactly again. The worldwide medical device, the division that i felt was really hurting, up 4. 9 , very good new drugs are good, too. Ons again, people get too excited. Jnj then sells off its like a drug take aspirin for three days and then buy very solid quarter. You are happy with the leadership of alex gorsky. Yes it ran in anticipation of a very good quarter and you got a very good quarter what happens when that happens is that people sell. Then you buy in a couple of days. And valuation is okay for you . Its not that bad. How many other aaas are there . Thats a trick question. Arent many left now. Let me see. Duracell all right so many other stocks to keep an eye on this morning. Coming back to earnings shall seeing how things open this morning. Thats about 4 1 2 minutes away. Stay with us on squawk on the street. Where to get in. Where to get out. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. Youre watching cnbc squawk on the street, opening bell in 90 Seconds Health care replacement bill essentially doomed in the senate a big day, jim, for currencies dollars now 8 below its january high. May 2016. Were back to that level in the euro i think that the euro will continue to go higher, the most undervalued currency a lot of these guys i read are saying the euro is a crowded trade. Are you kidding me when they start raising rates over there, now that youve got the banking you have the banking problem fixed in spain you have the banking problem fixed in france. Vut banking problem fixed in italy. What more do you want . Theyre open for lending and open for business there. Its way too cheap i urge people to book their plans for this year because its going to be really expensive next year. Its interesting you say that a look at Global Markets who have gained or lost market cap share since the election losers, china and the u. S. Winners, france, germany, italy. Absolutely. Thats why my wife was smart enough to go over there and buy a place in italy at 104. She said, listen, theres no value in real estate here. Youre not allowed to own anything you made me sell everything. Im taking the money and buying something. There you go theres a little marriage issue. Little color in everything netflix color, marriage color. What else . Lets get the opening bell and s p at the bottom of your screen Allianz Global Investors ringing bell at the nasdaq sg blocks doing the honors nvidia is in the news. Goldman reiterates its sell call. You know, i happen to like amd. Offering nvidia today. Every time the knives have been out you have to cast them. Nvidia has been related to bitcoin. We dont talk enough about bitcoin and its doppelganger but people are using these nvidia chips to mine bitcoin. There was a little too much hot money in nvidia. That comes out. Then go right back and buy nvidia its an Artificial Intelligence play. Look at bitcoin youre right fascinating. Get a lot of questions about them do you i cant answer them effectively. Block chains come up more and more often. Im hoping that ibm talks about that tonight on the ibm call they have some big block chain business they dont identify it connected to bitcoin but its really about block chain. And those are things that, yes, im asked about constantly im always hoped im asked about a common stock when i get really in the club demand for gpu cards, crypto currency demand is not sustainable. What happens if you have another 80 crash like you did in 2013, 14 . Thats why i want that hot money out of nvidia. Real money should come in because of Artificial Intelligence, Machine Learning nvidia chips, people are using nvidia chips using Artificial Intelligence where they have a much lower, much, much lower default rate than people do you ever read oliver sachs yes, the man who mistook his wife for a hat. One thing that humans have over everybody else, they have judgment nvidia is making you feel machines have better judgment than humans. If oliver sachs were alive, doing that book now, you would have to say maybe im wrong and that the Artificial Intelligence does have better judgment than humans when it comes to lending, when it comes to making important decisions, it keeps learning and learning and learning you go right back to Netflix Netflix learned what i like. They mine the datea. They dont put through i dont watch orange is the new black. Im not bombarded by that kind of get much more the visce l visceral. Do you think it can drive better than you . Yes these machines do not trade. They dont get tired, have stamina. Amazon needs that. Were going to run out of drivers. The thing we need more than anything else in this country is drivers. Thats going to be the next shortage, drivers. But overall concern is, over time, Autonomous Vehicles will put drivers out of work. Theres a gap space where we will need more drivers and then, yes. In the same way theyll put checkers out of business because youll scan and that will be it. Thats a lot of people. Thats a lot of unskilled work or people who dont have the right skills for the economy. And that certainly, at least, has been one criticism of the Current Administrations approach in terms of trying to bring a rebound in manufacturing when, in fact, the economy has moved on to a certain extent. Well, theres still a lot of highpaying jobs i know this is not a skill an unskilled job that many people want there are still many highpaying jobs building pipelines. I know that is a manual job but you can make 70, 80,000. Welders as well, a shortage thats been around for a long time math skills, quite significant math skills required for welding. Speaking of production, oil is about the only thing working at the moment. Chevron and exxon are leading the dow. Goldman, jpm toward the bottom of the list today. Look, at a certain point youre going to have to buy jpm. A lot of these are about what janet yellen, that dovish talk on the hill really has been theyre going to make a lot of money. You were all jpm 100. Im not keeping you on that. 9 away from it. Its going to go to 100 maybe it has to visit the 80s before they it does that im not abandoning jpm not with the Balance Sheet of 250,000 employees and 330 billion market cap and constantly getting bombarded. Dont forget the Balance Sheet. I mentioned im kidding. Just like bank of america, 3 billion left on the table if they dont raise rates theyve got to raise rates its their chance to raise rates. Maybe they want to sell off the bond portfolio first thats why gary cohn i want him as the fed chairman. Wouldnt they disappoint you if they didnt, say, hike this year they got to the Balance Sheet first and then saved another hike for next year i would like that if they do that, that is the way to get out they have to get out you get gary cohn in there and he sells them off and issued a 500 billion savings bond for infrastructure all these can work gary listens to the show he knows this. He does. He listens to the show he knows this. We have a couple of things we havent gotten to. Lmt. Record high today. Shes so good wants no publicity, which is too bad. I want to give it to her. Have you seen her on the list of possibles for the uber job. Are you serious yeah. Swisher saying the company is scrambling for a woman who understands logistics. The enterprise ceo. Really . Runs an 4 billion Market Cap Company is going to go run uber wow, that would be such a fabulous hire. I would pay her anything that would be a great hire shes really good. Remember, a lot of people thought she paid too much for united technologies. Shes taken that work. Dont go out on a limb here and say shes not going to take that job just going to put that out there. Netflix slightly off the highs but up almost 9 market cap comparisons it does put it in some perspective. Same market value as time warner right now. Time warner, the giant of media that is being bought by at t, trading a bit below, of course, the implied price on that deal not going to close for a little while. Present value of subs 104 million streaming subs around the world thats a superpower. And people have targets global superpower. They misjudged. Look, it is so subjective, we really cant make a good judgment about what were going to do. They should get out of the they should entirely stop making any estimates. Because if something hits in a given country, it turns on. Kind of reminds you what musk has been saying about the stock this week. Yes. You either believe we are going to be the biggest auto company in the world or you dont. And theres really not much in between. Nochlt th this is a tech company that sells product where you cant go in against them. You ruin your Gross Margins. Everybody would have their Gross Margins ruined if they came in against netflix because they give it away 8 how many people do you have in your account well, four, i guess four of us. I do, too paying 30 a month, would you do it 30 . Yeah. 30 could get a little tough. How about 12 . Oh, yeah. Pay more for costco. Talking price hikes at netflix for how many years he doesnt watch the show. Why bother raising if its all going so well until one day that negative Free Cash Flow starts to more concern people. A sign of enormous success. I keep trying to tell you that. That is a great line. Free cash flow. In seasoned history large cash flow burn is a sign of enormous success. Its the smell of victory. Im going to remember that if i ever launch a business and my investors come after me. Enormous success im burning more cash than ever. Great thing to say to the credit card companies. Im not paying because were having enormous success over here. Proctor sb ger gamble, dayo with that fight for a board seat undertake undertaken by nelson peltz 30 of shares are held by retail thats tough if youre fighting a proxy fight and you want to reach them that could be hard you and i were talking before the show what is a top board at procter gamble, why the company felt the need to hire four investment banks is beyond me, to advise them on one board seat fight that money might be better spent elsewhere. I love mcdirney. Former ceo of boeing and 3m and ge top ravenked guy he has been around. Easier to put him on, get him in the tent. But he is a total heavyweight. Hes great this is not a board where you look at it and say, hey, come on they really need help. I do think that an outside guy, making some good sense can really help them. Did you notice they moved up the timings of their Earnings Call citing efficiency improvements in accounting and our review processes. Thats good. An early attempt to push back thats a good one i keep hoping that the dollar they did a great discourse on the dollar and missed earnings two quarters ago how literally what they would be making if it werent for the dollar i like the stock, with or without peltz. I think theyll do fine. Theyre not short of innovation. But they will triumph. I felt very long saying i liked it either way. Sometimes its okay to be alone. And im alone. Youre never alone. No, ive got two dogs. The two dogs. Nvidia. Got the wife. Tonight csx, ibm ibm, which is back to 152 and change, jim. Theres no expectation there, let me tell you. I know that there was a note yesterday saying will you please, please just bring down all expectations i will tell you another stock that there was no expectations going in and that was Goldman Sachs. When you have no expectations going in, sometimes you get a nice bounce. Theres no expectations. And thats not bad that shows you that equities killed it. My old division crushed them lets go down there and make a few jokes. When muni screwed up, hey, guys, we got some xerox for you to do. Not a good year in commodities. Thats for sure. Is there something you like that i can just talk about anything that you like anything that i like . The mets. Its hard to like the mets. Coming back. Little late but thank you. But theres something. My kids thats about it. When do they report they havent reported for a while. They havent reported in either. If they bought give you an upside ill endorse. Thanks. My dogs are all right. Not so bad. Whats return on equity there . Goldman return equity is pretty good. 8. 7 isnt that good. Compared to others its not. You say one day i remember you saying that you felt 6. 7 might be the new norm. I did there was a belief that below ten you wouldnt get above now you are. How about morgan stanley, what do you think they can do . A decent quarter. I do, too, that gorman can get the right hes at the end. You want to be at the end so you can say why youre not this and not that i think the story there is underarmour coming back. They are not in the mall they have a fabulous affinity program, great place to shop nike is doing well i love my kohls fortress Balance Sheet for retail. They do are you in the kohls interview . I dont think so. Its in retail but they are doing so many things right i wish they would get some credit that yield is safe. Under armour is under pressure this morning but your point yeah. For now. Nothing is safe in amazon decided, if jeff bezos said i dont like kohls. Im going to open whole foods next to kohls the reason i like it, it doesnt have food. Target has food. Target may have done better this quarter. If you have food, you have all these German Companies coming in but they dont have food they need one more big brand kohls needs one more big brand. May i suggest they need ralph lauren, big time not just the lowend ralph lauren. What penjcpennepenneys has h sephora. Look your selfie best, put together a consortium. You dont like this idea i like it you talked about that for not ulta. Ulta is coming down they could do a deal with ulta has a lot of private brands i dont know i think kohls is the world could be their oyster but they have to think big. They have to think big. Lets get to bob pisani with the dow down this morning. Good morning, bob. Good morning. Trouble from the banks this morning. Sectors, energy modest start on the upside Interest Rate sensitive. Reit, utilities slightly better on the idea of the tenyear being weaker banks moving down a little bit guys talked about goldman, bank of america the regional banks are starting to report. Those are the ones i like, like comerica reported today. Thats no trading. The big thing is long growth, Interest Income and nonInterest Income theres comerica down about 1 their guidance, their 2017 guidance take a look at this, average loan growth up 1 . They had talked about 1 to 2 good energy book this is okay but not great thats the primary reason its down, mediocre loan growth very sensitive to the short end of the curve that will help them out. Its not moving as much as they had hoped. NonInterest Income these are the fees everybody gets charged growing for years. 30 to 40 of their total revenue base now thats been growing. Thats a good point. Credit quality has been strong those are all good points. Again the loan growth is the reason were seeing a bit of weakness today stock was at an historic high a week ago low volatility everybody is complaining about it td ameritrade. Tim hockey, ceo, has been on our air many times since taking over the reins, said broadly engaged strong trading volumes with Healthy Trends in new accounts and institutional channel continues to break records for asset gathering. Remember, theyre closing that deal for stock trade as well little surprised about the trading volumes doing so well for them were going into the heart of earnings season. The biggest complaint i hear somehow the market is overvalued i dont particularly see this right now. Most important metric you can look at is forward earnings estimates, correlation with stock prices 2017 right now, this is 17 1 2 times earnings 20year average is 16. Slightly overvalue youre having a rising earnings market, i dont think its dramatically overvalued. Theyre complaining about tech stocks look at at group as a whole. Right now theyre 18 times forward earnings historic is 20 notably elevated, apple is trading at about 16 times forward earnings, 12month numbers. That might not sound like a lot. Apple traditionally the last five, six years, has been well below 16 times earnings. All the analysts community has convinced everyone per apple that we were in the middle of this gigantic super cycle with the iphone they had better be right up 30 this year, everyone has bought into this gigantic iphone sale thats going to happen at the end of this year in september or october that better happen we need that to keep the price up on that particular one. That doesnt mean there arent things overpriced. The most obvious one take a look at energy. 2017, 26 times thats enormous. 20year average is 17. Why has this happened . Why has everyone gotten the numbers so wrong on the Energy Stocks because of this. Take a look at oil everyone in the beginning of 2017 had 60 oil well, wait a minute. We didnt even get close to that weve been wrong no one has been able to get a forward price on oil not just six month, for years. Everyone has been wrong on that. Look at the xle. Big energy etf all the Energy Stocks in one basket has been going straight down for months now because everyone realized that the analysts have been wrong, projecting the oil prices and they have to keep taking the numbers down watch with exxon, theyve been taking the numbers with exxon down three months. Carl, exxon is at 89 cents we were over a dollar a few months ago there you see a good example of where there are definitely indications that the market is not pricing in the real forward situation for Energy Stocks. Back to you. Thank you very much, bob pisani lets get to Rick Santelli with the bond reports the ten at an alltime high. Especially with whats going on with the dollar and the euro. Twoyear note yields, very sideways chart of one week of tens, theres a drift. One week of bunds, wow, 54 point basis close is quite important you can see thats the one low about the middle of the chart and unlike our tenyear, we havent drifted below it yet, setting up that pattern. Matter of fact, bunds are holding up better. How do we know that . When you take tenyear minus bunds, the difference is 171 its the smallest difference since november all right. Now lets have some fun here closing prices are very important benchmarks now, remember, we close at 244 this year. Look at year to date chart of tens first of all, first jump out at you at 213 low closie ining yield for the r last stock we had was shy of 240, 244 settlement. Those tops are 242, 241 and just under 240. With a settlement of 244 you get what im saying . L lets go back another year close of 2015, we close at 227, which has always been a significant level ever since then dollar index, you ask . August 23rd and 2016 is the last time the dollar index closed at these levels as you see on the chart. You look at the euro, the biggest currency with regard to the waiting in the dollar index, you have to go back pretty much exactly an extra year around august 23rd of 2015, first of the greenback and still seemed to be technically on the move up lets see. Carl, jim, david, the whole gang is here. Back to you. Rick, thank you Rick Santelli. Lets get to oil this morning. Jackie deangelis is at the desk. Jackie thank you saudis are considering cutting their exports by another Million Barrels a day. Job owning, anybody . We talk about this all the time. A caveat to raising prices here. Its starting to trickle into the market as weve gotten to more depressed levels when we were hanging out around 45 a barrel doesnt mean theyre going to do it market does react to headlines like this. The dollar index, being so low right now supportive of prices something to consider there. Weve got inventories on deck tomorrow morning, department of energy supposed to report a 3 million barely draw. Last few weeks or month or so youve been seeing these reports impact the market. Finally, oil will react to earnings, as the stock market does as well, as a sign of demand back to you, carl. Jackie, thank you very much for that dow is down 51 on some weakness at the banks netflix hit an alltime high on pretty good vomelu, on pace for the best day of the year time for cramer and stock trading. Deutsche bank takes it up 66 to 80 on buy back theyre financing. David always said this could happen and its happening. Theyre taking down cheap debt and continue to buy back stock some of the debt is not cheap. This Million Dollars of stock, ceo. We have the Free Cash Flow to do this now, it is the best buyback ive ever seen in terms of the common stock. Not so great if youre keep that in mind a battle royal. Ethan allen having a much different day today. Yes and gary is a guy who its a hit or miss story, but if he gets it right, great cash flow if he doesnt, people buying it here are just riding the wave of the short squeeze. I dont like those stories typically as a short squeeze you cant tell people when a short squeeze is going to end, netflix being an obvious one with the enormous success of the negative cash flow. Jim, whats tonight Distribution Center companies. Hamid is a fabulous guy, the backbone supply chain. This is where all the action is. Ecommerce world, we need Distribution Centers, we need places to be able to get the stuff and those stocks have all been hot prologis is one of those from the crash. Good show. Nvidia see . Right . Where is nvidia . I woke up nvidia i have a dog named nvidia. Everything that the dog does is in sync with the common stock. I dont know which is first. I woke up nvidia during the show. You woke up your dog and now the stock is up . How much . Up 52 cents. There you go. Hes a rescue dog. See you tonight, jim mad money. When we come back, ceo of kohls and mark mahaney on netflix. 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. Good tuesday morning. Welcome back to squawk on the street. Sara is off today. Markets down by disappointing metrics inside goldmans earnings banks arent doing so well crude is doing all right, up a percent. David . Netflix is hitting an alltime high, surging as its subscriber numbers just crushed wall streets expectations House Republicans unveiling their budget for 18 as republicans pull the plug on their Health Care Bill what that means for tax reform and the rest of the agenda. How the ceo of kohls is attempting to fight off amazon and also slowing traffic in malls. He joins us straight ahead. Diana olick. Junes reading was revised down as well the street was looking for 68. So this cis a big miss on the wells fargo. Still in positive territory but the lowest reading since last november before the president ial election sentiment spiked after that as the Home Builders thought the Trump Administration would give them deregulation in the market. They did get some of that in march and Home Builders sentiment spiked again following water deregulation the problem now, canadian lumber ta t tariffs, growing increasingly concerned over rising material prices, particularly lumber, from nahb chairman mcdonald. Hurting housing affordablity even as consumer interest in the new home market remains strong current Sales Conditions down two points to 70 sales expectations down. Fire traffic still in negative territory down one point sentiment was pretty much down across the nation, up one opponent in the northeast to 47. Again, that in negative territory as well. A big miss on home builder sentiment. We get Housing Starts tomorrow morning at 8 30. Back to you guy. Thank you, diana olick. Bank of america and Goldman Sachs both reported earnings before the bell this morning Conference Call still going onment which will fred frost has been listening in to some of those calls. I did notice that stock at goldman had been up a bit, now down not sure if thats because of what mr. Chavez has been saying on the call. Give us the info we need. Bank of america call still going on as well, both of them moving off the back of that. Goldman sachs, another shocking performance in the income commodity business, down 40 year on year and quarter on quarter. Therefore, trading performance was down due to equity trading overall trading down 18 year on year, worse than rivals, bank of america down 9 , citi down 7 . Here is ceo marty chavez on the trading performance. Low levels of volatility, sequentially lower in several classes negatively affected the environment. Current backdrop has been particularly challenging for our franchise. For example, we are a Market Leader in commodities. But it was a challenging environment on multiple fronts. Fixed income commodities and currencies in trading with tough comps in the second half it doesnt bode well for the full year small beats in all other segments, ongoing trend of growth theyve displayed 40 year on year growth this time around. The market focusing on that ficc number and lower share count, so shares trading down although the moment bank of america, Consumer Bank showing solid performance grinding out that. Interest income, like jp morgan up only 9 but unlike jp morgan without a cut to the guidance for the rest of the year. Investors focusing on a couple of oneoffs, like the sale of its nonu. S. Car business overall, bank of america number without a clear negative as t Goldman Sachs. Guys yeah. Continued concern, i guess, overall about net Interest Income at bank of mencht w america. Wilfred, asked about the volatilist of the business and how do dampen it, he said at a granular molecular level, were working on it. Thats pretty little so much, he says, is blocking and tackling and looking to see where there are gaps in their client coverage and the ability to on board new clients and serve them theyll be pressed on this, i would expect. They are being pressed on it. Most of the questions you mentioned that client coverage because a couple of analysts focused on that saying i know youre saying its down to low volatility and commodities, in particular, of the fic c but pushing on declined exposures and why are yours worse . He didnt have a clear answer for it yet i guess youve got to say, look, is this another one off or is it a bigger trend are they trying to take focus away from the trading business and put it into the lending business weve seen a bit of a trend there. They havent given us an answer yet. Goldman shares down about 5 this year and down a bit today wilfred frost, thank you. Overall, too, when you look whats happening with yields today, falling again this is, you know, always what drives Bank Stock Trading as well 2. 4, 2. 2 range every time we think this thing is going to break out. You want the spread between long and short to be as big as possible thats where they make the money. Not happening yet netflix shares hit an alltime high today. Reed hastings talking about content creation on the call yesterday. Anything notable beyond 5 million. Net ads in q2, alltime record for q2s, up sequentially from q1. Notable beyond that. I think were just seeing that the rewards of doing great content, focused on the quality of the service, are paying off. Stock gets an upgrade mark mah aney raising his price target to 210, joining us from aspen, colorado. Nice work if he can get t morning, mark. Good to see you. Good morning. All right so, what explains the enthusiasm on the stock today well, this was kind of a clean quarter, domestic and international, outquarter domestic and international the key backdrop on the stock in terms of the momentum, theyre going to add more subs in the u. S. , most mature market in 2017 than they did in 2016. You know, one of the bearish concerns has been nearing saturation thats not true. Thats emphatically not true if youre adding more subs this year than you did last year. You still havent reached that maturation level people are upping their International Subscriber accounts as well this company is clearly surpassed 100 million. Now we should be talking about whether 200 or 300 million in subs thats where the debate is on stock. That allows estimates to go up and price targets to go up. You raised your price target pretty dramatically, 210 what are the markets that drive that number . I think sooner rather than later well be able to look at it on a consolidated cash flow business for now, the business can swren rate 3 in earnings, were willing to put a 30 multiple on that for the international business, because were still not there. Kind of a mature profitability level, seven to eight times. So its about half the value of the stock. Little bit more than half is from the international side, which will have a lot more subs. Thats how we get to 210. Mark, those paying attention to cash flow we were joking this morning about whether theyre just debbie downers, analysts with pocket protectors, looking past debt to equity or just the future for growth. How do you account for that in your model well, i think what this company is going to do is the more successful they are with international launches, the more negative the Free Cash Flow is going to become because theyre going to accelerate the rate of new market launches. Look, this is a heavy tablestakes business in order to start in any market you have to put down 30, 4050 million just for the rights in that market. Before you get a single paid subscriber in. So its expensive to ramp this thing internationally. Thats whats driving the cost down investors should be able to look at the u. S. Business, which has seen margins go from 16 to 40 today and have confidence that this business can scale. By the way, theyre now finally starting to show profitability, similar profitability ramps. Free cash flow will be negative. That turns in two to three years and can turn rapidly. You know, mark, theyre calling themselves sort of a global superpower, content superpower who rivals them . Who conceivably hastings has made the point that amazon, you dont necessarily see competition. They almost can Work Together in a market in the sense that you can subscribe to both. Who is going to be a rival to this service if it does reach, what are you talking, 200, 300 million subs worldwide we look at amazon customers, regular amazon customers, 50 of whom were netflix subs prime customers, its almost like amazon prime customers were a leading indicator. They have about a 70 skew to subscripti subscriptions. Amazon probably isnt a threat the bigger issue, the bigger trend is the dying of the fat bundle and consumers across the globe are a la carte picking their entertainment options. Amazon is still going to there long term. I dont know who will be spending more on content in five years. The single biggest buyer of content globally will be netflix in five years w that will come a lot of leverage to improve the terms they get with the studios and allow those Free Cash Flow dynamics to switch. Theyre already the biggest, arent they, mark . Already the biggest spender right now, right theyre darn close. Getting at some of these budgets is tough its hard to make that definitive statement david, youre right. Theyre awfully close. Emphatically clear that theyre the biggest buyer, call it three to five years. Good news for content creators mark, thanks so much see you later. Mark mahaney. Thanks. Well talk to the ceo of kohls, Kevin Mansell, about retail and fighting off the amazons of the world chairman of the largest Utility Vehicle manufacturer in india is with us, his take on the Trump White House and global manufacturing. Speaking of which, shares of hog getting slammed after lowering their fouryear t rehedae. Guinc lomo aad stay with us where to get in. Where to get out. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. 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. Republicans unveiling their budget proposal. Failing to win support for their Health Care Reform bill. President trump and Mitch Mcconnell calling for a vote to repeal obamacare outright without an immediate replacement. Ylan mui, the budget is crucial to get to tax reform. Thats right, michelle. This budget actually ties tax reform to major changes in popular entitlement programs like medicare and food stamps. It does include increased fund ing for defense, 621 billion in total for next fiscal year it also includes 203 billion in mandatory spending cuts. Diane black calls these crucial. House budget calling it a pathway for tax reform thats why its so important obviously republicans want to pass a budget so they can keep the government running you need a budget before you can get started on taxes right now its unclear whether or not republicans have the votes to get this through the house. On one hand you have the conservative House Freedom caucus that says we want to see more aggressive cuts to mandatory spending programs and n the moderate tuesday group saying 200 billion in cuts is already too much even assuming that this can get through the house, the politics will get even harder once you reach the senate in order to pass a budget through the upper chamber. Guys, if they dont reach a deal, tax reform will be dead before it can even get started back to you. Holy grail that the market keeps waiting for, tax reform. Now john harwood with more on what to expect on the agenda going forward. The move from mcconnell and the president is a fullon repeal vote, john if they couldnt do Health Care Reform in the senate now, will they ever get a clean repeal vote no, theyre not this will let Mitch Mcconnell put a puncture wags mark on the end of the health care debate, at least for now at some point he said he will get back to it but one of his advisers told me last night its a little soon for that can you stop the clock on this debate by having the vote to try to take up a clean repeal. I expect that vote will fail but if they do take it up, that is also likely to fail then the question will be how do republicans reconcile the problems theyve got right now with governance . A weak president , who is historically unpopular, who hasnt shown a great command of the policies hes seeking to enact. Youve got a republican congress, which is ideologically very conservative, committed to lower taxes and Smaller Government but their base right now is very much committed on election day their base disproportionately includes blue collar voters who rely on government who think that the tax system is stacked against them whether they can produce policies that match their base, thats a big if. When you say punctuate, in other words, they could take a vote, put health care to bed, even if its a failure, and then move on. The market is just very much focused on can they get to tax reform and until they decide to do something, anything, when it comes to Health Care Reform, they cant take the next step, right . Right. This has to come to an end in some form or fashion right with each budget you pass, expedited procedures called reconciliation theyre now trying to do that on health care. Once they finish that, they can pass a new budget resolution thats what ylan was talking about. Not going to be easy if they pass that budget resolution, they can take up tax reform doesnt make tax reform easy but at least they can try. Well have to see whether or not it will be a big increase in the deficit or theyll make it deficit neutral. Of course, the problems with the border adjustment tax indicate that deficit neutral will not be easy very, very tough not much easier than Health Care Reform but tax reform is something that President Trump values, that the Republican Leadership in congress values and now theyre going to take a stab at that. Markets do. Thats why we talk so much about it. We thought it would be an interesting summer now it may be an interesting fall, john. Thats right. Well find out later. Lets get over to courtney reagan, sitting down with the ceo of kohls, Kevin Mansell hey, court. Good morning to you, carl thats right i am here with Kevin Mansell, ceo of kohls. Were in clifton, new jersey, in the heart of what you do every day. A lot of your competitors are Closing Stores kohls has 500 more stores than macys you all look at them as assets not liabilities. Youll have to make the case there. A lot of people are confused about why thats different for you than others. Sure. Number one reason. Were not in malls, offmall stores 90 of our stores are not in traditional malls. As we move to an omni channel world and we are there we are looking to be a best in class omni channel retailer. One way to do that is to leverage your store base for the convenience, inventory asset that it has in it to make the customer Shopping Experience much, much better. From a four wall perspective, we have very, very few stores that are negative cash operating profit almost all are positive. Were not stressed from a cash perspective to make those decisions. We spent a ton of money in our stores over 1 billion to update, improve our stores, invest in new technology we spent over 2 billion from a Technology Spend standpoint. A lot of that is in our stores we believe in leveraging our stores we believe its one of our biggest single assets. As these other competitors close stores nearby to where there is a kohls location are you aggressively working to try to capture that traffic and that customer, that opportunity that may exist . For sure. We definitely have a plan. As you know, theres a significant amount of store closures happening this year, both in the mall anchor space but also in the mall specialty space. Beginning with back to school, companies that go after those in a meaningful way market share shifts as a result of those closures. Our objective is to get more than our fair share. Were pretty optimistic on that. Weve had experience with that with other mall anchors. As they close we picked up in those trade area. New shoppers or shoppers that kohls had previously . Were always going to get a mix of both, of course i think probably generally i would say its more spend with existing shoppers as a percentage of the total. Amazon is a big gorilla in the room for all retail, capturing a lot of share in all categories and now theyre going pretty aggressively after apparel with their own brands and other prime wardrobe program. What are you going to do as a ceo of kohls to make sure youre still getting shoppers convenience price and value, something that amazon really does offer i think were really well positioned there to be honest, as i said at the beginning, our focus,best in class omni channel we have a physical presence. They dont we have to leverage it, do a better job of earning that customer dollar by leveraging it think about it from a Balance Sheet perspective, courtney, were very different than many of our competitors we have a really strong Balance Sheet and used that Balance Sheet to our advantage, to make sure that from a technologies standpoint we have convenience aspects, for the customer engagements that needs to happen to really take advantage of that we feel good about it and think were starting to see that. Under armour launched earlier this spring. You said it exceeded expectations now that some time has worn on, how has the customer been responding do you know yet if you capture aid new customer coming in to buy under armour definitely new customers, no question about that. We know that for certain t continues to be exceptionally strong we put a stake in the ground some time ago to be a leader in active and wellness and under armour is certainly underpinning that effort. That business is growing for us. In the First Quarter alone it accelerated to a doubledigit increase i expect that to continue throughout the course of the year its broader than that apparel, footwear, wellness aspect of the business part of a larger strategy as well. Womens is a very significant part of your merchandise mix i believe its 30 for apparel, 10 or so for accessories. Thats been an area that has been difficult for kohls. Turn that around, some analysts say we can look at an upward trend after five quarters of negative comps are you seeing any traction toward the Positive Side yet for sure. No question about that we are seeing improvement. Womens apparel business, our private brands distort very highly i think the benefits of our Speed Initiative in terms of sourcing womens apparel more effectively, more quickly, getting more relevant merchandise on the floor, more timely basis of paying off i think you are going to see improved metrics in womens, no question about that. So a lot of folks look at Department Stores right now and say this is a Department Store doldrums things are not so great for the Department Store its a dying format in retail. Do you think thats a fair statement . Couldnt disagree more. Department stores are not all equal, right we just touched on a few things. Our Balance Sheet, much different than our competitors store portfolio, newer, updated, invested in. Value platform we have the best loyalty platform, combination of kohls charge business, best in class 30 million in both of those camps. Our product as well is really, really important. Last question, we talked a lot about consolidation and retail and some changes in the way that some of these retails around nordstrom. Interested in going private. Would kohls ever do that . We review that on a regular basis with the board Capital Access one of the most important ones and our perspective is well keep going down that road gl. Kevin mansell, ceo of kohls. Thavengs for sitting down to talk to us about the business. You got it. Thank you, courtney, for bringing that to us. When we come back, the chairman of the Mahindra Group with us. Massive indian conglomerate investing in the u. S. And other places why hes calling out ilan musk and the wolf huffed and puffed. Like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Im scott wapner firefighter burning in maripos county has grown to 11,000 acres. Hundreds have been evacuated fire broke out in one of the famous bookshaped skyscrapers in central moscow, starting on the seventh floor and engulfed the area of about 2100 feet. 60 firefighters fought the blaze. No one was injured fights broke out in taiwans parliament during a budget meeting for Infrastructure Development plan members of both sides could be seen tackling each other there you go, to the ground. Shoving, throwing water at each other. Wow the duke and duchess of cambridge visiting a world war ii nazi german concentration camp in poland on the second day of a goodwill touring that underscored britains intent to maintain good relations after it leaves the block. Using royalty for diplomacy, as they always do over there thank you very much. President trump calls for focus on growing america jobs and making america goods, mumbai looking to hire roughly 5,000 people locally joining us now is mr. Mahindra its made in america week. Is that why youre here . Absolutely. This is Serious Business im here for the formula e in brooklyn hope you got time off to go and see it. The electric car race. Electric car race this is the future. This is the future, right we want to talk about that in a second first, youre going to open a factory in detroit, right . Is that the big news here . Isnt that a wonderful twist of history indian automotive factory opening a factory in detroit part of the renaissance of detroit. What are you going to make there . Offroad Utility Vehicles ill not describe it any more to you. We need to keep a little suspense in there. For viewers who may mot know you produce tractor, Third Largest marketshare in the United States. In the u. S. For mahindra tractors. Largest in the world in terms of volume, around the world, were number one. Why manufacture in detroit . Well, you know, its interesting. Detroit, we went in there to really hire u. S. Engineers some time ago when detroit was laying off people so the best talent in the world, which was being laid off the most experienced talent was actually in detroit. Now we are being poached from because the situation has changed. We actually have 120 u. S. Based engineers sitting in detroit in the Mahindra North American Technical Center apart from this offroad Utility Vehicle they have designed and developed our next minivan for global sales, an American Team sitting here so its actually india outsourcing to theu. A story you havent heard before. What do you pay them, on average . Im not sure what the average is i would be giving you a wrong figure i think we pay well because we have no problem hiring people. The other big business you have in the United States is i. T. Services. How concerned are you about h1b visa restraints that the administration is talking about . Not at all. I think the h1b, in a sense, is focusing on skilled balance coming in. We have plenty of that i think people dont really know but we have, in fact, hired 2,300 people locally thats u. S. Citizens and greencard holders. And our plans over the next five years are to double that number. This year alone we might hire over 1,000, 1,500 right here, not h1b visa people. Give us the overall numbers how much have you invested in the United States . And you expect that number to grow how much . Same with employees. Invested roughly 1 billion up to now. We expect to double that over the next five years. Weve got 3,000 employees now and expect to double that in five years just doubling. Sounds like your hiring plans are untethered to any change in immigration policy. No. Youre hiring locally we hired these,000 even before the Current Administration came in so we were thinking that going local is a good thing in any case and we were moving up market in the value chain and taking very highquality engliineers. Why is the overwhelming notion that the u. S. Is having to go to india to find, say, smart engineers . I think there is look, we do turn out a lot of engineers the needs of america, growing rapidly, again, are high as far as im concerned, we are planning to localize here. Thats our business. We are looking to hire engineers as well and continue to look at h1b, which do afford us to get people from india still. A lot of Global Companies have been making their case in the states about how many people they employ here in part because of continued discussions around trade. Very hard to ascertain exactly where things will come out are you concerned at all in terms of what you hear from this white house when it comes to the potential for tariffs and other changes in trade agreements . Not really, david you know, i actually studied here ive been in this country of a while. I look at it as a continuum. America is a democracy, like india. You dont make Business Decisions based on one regime. Very free market oriented country. I dont think it will get derail ved quickly from some rhetoric other hand, let me give credit to President Trump his rhetoric may, in fact, be expediting some people who are teetering on the edge about setup. Theres no question that those kinds of decisions may be expedited. Ilon musk, you called him out on twitter specifically, if we can bring it up and show people, about his lack of sales in india what message were you trying to get to him with this tweet Prime Minister came here, met him, invited him to india. He said he would then he was making some noises about india on twitter all i said to him was you time you got out here, elon you dont want to leave that whole market to mahindra, do you . The more the merrier and greener. It would increase awareness of electric vehicles, the size of the pie thats aye meant what i said thats not tongue in cheek fully electric or hybrid . Fully electric. Were not going to take the halfway measure. The board is set to vote, is it later this month or later this year about whether or not youre going to go fullscale luxury, take on tesla directly for a luxury vehicle with your tourin based Design Company . I hope you know the company they used to design ferraris we have access now to a highend brand within the group and so whether we take on tesla or not, thats a matter of positioning. It is, in fact, a very highend brand. We think its time to use that kind of brand to go in for a very highend, luxury electric vehicle to offset the other end of the market, which we are presently in, lowend commuting market we intend to strive in both areas. Investors believe their head start is wide, the moat is wide and all this attention from you, volvo, the big three, it will take them years to develop that kind of brand in engineering. What do you think the market thought of tesla when he first came on . They said tesla who . Things change very rapidly tesla wasnt known it was a glint in elons eye a few years ago. Were in a very rapidly growing market im confident at some point in time people will be saying that about mahindra. Are you envious of his 53. 2 billion market value and do you think its justified envy, im told by my doctor, is bad for your health you have to keep looking ahead and grow fast. Thats how we work, david. Do you think thats justified by the Market Opportunity . You guys are the experts in the market i have no clue what is justified. All i know is that we were a 68 million market cap in 91 when i joined and 25. 4 billion today as long as that trajectory continues i wont be jealous of anyone. Thank you for being on. Come back any time youre in the United States. Shark tank host daymond john will join us, senator tom coburn will join us as were getting comments from mcconnell and others jnj, fouryear forecast above estimates. Stocksermu o vy chn the flat line dow down 87. Wheres jack . Hes on holiday. What do you need . I need the temperature for pipe five. Ask the new guy. The new guy . Jack trained him. Jacks guidance would be to maintain the temperature at negative 160 degrees celsius. That doesnt sound like jack. Actually, jack would say, hey mate, just cool it to minus 160 and were set. Good on ya. Oh yeah. Thats jack. Now to the cme group and rick santelle with the Santelli Exchange good morning, rick. Thank you, michelle i like this guy. Former senator, now just dr. Tom. Tom coburn, thanks for taking the time this morning. Its a pleasure to be with you all. All right now, we have four minutes here first half i want to talk about the American Health care act of 2017 i know that in the past youve expressed reservations, and many have you said you would vote for it it has m rochlt rphed a little bit. Today doesnt seem to be good news give me your opinions on the ultimate fate of this bill. Youre going to see a defining moment of how many people in the Republican Party put out press releases, saying they would vote to get rid of obamacare and then wont vote for it so, you know, what youre doing is youre kind of whittling the freshman four who said they would stand up and do what they said they were going to do then you have the basis to actually start fixing things the reason you cant get past the reason you cant get the votes for the this bill in the senate is because it goes against what the senators have been saying for seven years. And so youre going to have a fraction that wont move off of that lets have this vote and define who was telling the truth about what they would vote for and who wasnt theres no problem in changing your mind. Theres no problem inmoving things down the road to try to get a deal youre not going to get the perfect thats the art of compromise thats what politics is all about. We have such factionalization in our country today, even within the Republican Party, that its hard to get anything done. So, whats going to ultimately happen on health care is private enterprise is going to introduce market forces. Its happening right now i was in chicago last week, rick im seeing stuff that is going to blow your mind. The big hospital chains are going to get their lunch eaten and were going to see a lowering of prices for the average person in this country by about 35 . Man, that sounds great, tom we both talked about this in the past i dont understand how some of these monstrous bills can address price. When you go into the doctor i defy many of you out there try to nail down prices of anything, procedure. I understand its not like buying a car you almost cant get an idea lets switch gears for the remaining amount of time, 2018 budget resolution. Looks like its coming forward i dont know if youve had a chance to look at it a little bit. But do you have any thoughts moving forward, understanding that Social Security needs to be addressed or not addressed that was trumps promise they are looking at disability they are looking at things like medicare, food stamps. Trying to nip at the edges your thoughts on the whole package thus far. Its a good package 202 billion in terms of mandatory spending reform is just a drop in the bucket. I did all the oversight on the disability problems. Its 50 of it is fraud. What that doesnt mean is that you shouldnt help people that have disabilities but you should not put people on disability who can actually do a job. Thats one thing Social Security disability is already bankrupt its going to be very much sooner than Social Security will be bankrupt. So why should somebody like me continue to get the full benefit of Social Security in the next tw years i probably will have drawn out everything i ever paid in Social Security somebody with a higher income ought to have a lower benefit or pay higher tax on their continued earning. Thats whats fair to people who will actually need Social Security. Tom not only do you make a great point there but the federal government in this instance needs to lead by example. Case in point, chicago and illinois all these pensions, promises people who will enroll in programs some of these issues with regard to longterm underfund ed abilities. We are out of time, tom. I really thank you im going to have you back as we watch the budget and potential Health Care New legislation move down the pipeline. Thavengs again you bet. Well go to david faber. All right rick, thank you. Shares of Goldman Sachs this morning. Not that long ago, almost positive to flat, lets call it. Conference call has ended. Not necessarily testy. But they were challenged by a number of the analysts, at least we had at least 14 questions we were able to tabulate, dealing with what happened to fixed income currency, commodities, particularly commodities, where there seem to be a great deal of questions. Why . In part because mr. Chavez said a leading commodities business, and it was a challenging backdrop for commodities Brendan Hawkin was on yesterday saying it had been as little as about 8 of overall ics revenues what is it now and mr. Chavez responded, were not going to break it out further except to say that out of the 73 quarters weve been a Public Company it was the worst quarter for the commodities business that does seem to be concerning people asked them followups by the analyst on what he meant by blocking and tackling in that particular business, what it meant for the execution that they had that seemed to be the focus as it went on the stock has weakened well see. Michelle, just another challenging quarter to a certain extent for goldman in terms of at least this particular area where they had weakness. So be, i assume overall volume in commodities is down but sounds like they also lost marketshare. Are they not providing best execution . Or not doing as much activity as they had done previously. Its actually a larger portion percentage wise of the overall business there had been previously when that activity died down dramatically, it resulted in a big hit. Interesting to see their private equity stakes, right this little odd part of the business that i wasnt quite convinced obviously you cant do inhouse trading but the big investment banks would be doing less of that kind of thing, right . Yes. Thats tha bolstered their bottom line. They did okay in terms of that overall part of the pie as you say, small. Very small. Very, very important and clearly the focus. Goldman klein as 2. 5, not as bad as the bank index down one the dow down 140, the biggest drop since swrul 6th for all the major averages chipotle this morning down on some reports the company has temporarily closed a location after a customer fell ill. Stock was down 6 , recovering just a bit here. Executive tells business insider, quote, we are working with Health Authorities to understand what the cause may be and to resolve the suaon aittis quickly as possible. Be right back. Tap the future kicking off the live pitch towards tonight in new york city in a Cross Country search for the next great startup for more on this, were joined this morning by the host of the event, shark tank shoest and fashion entrepreneur damon john who is back here tell us about this there is my fifth year in the competition. It is called miller lite tap the future were hitting five cities. Each city, someone will win 20,000 and go on to the big prize, compete for 100,000. I see better stuff on, you know, on this program than i do even on shark tank. This is every day american pitching their idea right there. And theyre getting the money right there on the spot. And miller doesnt take a dime what kinds of projects have you usually had success . You know, one of the companies i believe sold for about 27 million and that was called text pride. Can you text or emoji your giants or the knicks or im not saying just new york people, but, you know, ideas like. That they sold for 27 million year one are we at peak pitch format there are so many of these traveling shows where you show up i went to one in miami its like the concerts of the 1980s. Lines out doort so people could do their tech pitch. You know what i think its just starting, really because nowadays people are saying, you know, to the major companies, not what youre doing for me, what are you doing for anybody . Im starting to see most of the major corporations have some form of giving back. And it empowers people and creates jobs unlike the concert we used to go and have a good time and go home now people are being able tone ploy themselves and families. Do you it this entrepreneurs, their vision is to one day sell because theres no chance theyre ever going to be as big as amazon . Or Something Like that you know, most successful entrepreneurs that ive ever met were trying to solve a problem and they had a purpose if you start a company with the idea of just selling, its like driving forward looking in the rearview mirror. I dont want to invest in a company like that but as it grows, entrepreneurs do see there are ways to take in the funding and raise capital. But they normally want to solve a problem. I mean, we talk about the giants yeah. Theyre just giants and the idea that youre ever going to get that big is looking less more and more remote. Or you may get acquired right . So these giants are all acquiring brands now because some of the big corporations now, they cant keep fostering innovation in the organization so go acquire do what kodak should do instead of create the own digital platform. You are going see retail and figure out how to pick that lock we had decent guidance from target the last couple days. Im not im seeing the retailers are struggle theyre going off the credit card base. They thought that is the only thing that was going to keep them alive if theyre not creating a live style for people to come into the store, there is no reason for anybody to come into the store anymore. The kids arent coming in there looking for the next boyfriend and girlfriend theyre on instagram everybody a woman who knows her size, shes going online and visit delivered to her door. My particular grouping or area that you expect to seat most entrance from this upcoming contest . No, really it is spread all as krot board. Ive seen people with small franchise. People with technology and people with Service Industry businesses so weve seen them all they all come through the door you know what . If you dont win the competition, just prepare yourself for the next competition. Hopefully win. You created a company if you were to create a new brand today, what would do you differently . It would be a digital platform it would be a way to deliver some form of technical aspect of clothing you have to just keep topping everybody else now just to make it and something that you just look good in is not good enough anymore. Except the guy who startd sowing caps. I would have to find somewhere it measures your blood and makes you jump higher, feeds your vitamin or Something Like that daymon, gaulz to see you. Cant wait to seat results from tap the future. When we come back, a lot more on the growth at netflix. That stock up better than 11 . Thats an all time high today. Well talk to the partners when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Welcome back to squawk on the street. Markets are low we are Health Care Standing out as one of the worst performing s p 500 sectors to far this has the late aest tempt to overhaul the u. S. Health care system lost some momentum. Pharmacist stocks add together declines here. You have mallinkrodt and mylan the laggers. Managed care taking a hit. Humana down 2 as well that sector overall still up about 15 year to date so keep an eye on that sector overall as Health Care Stocks and the etfs move around Health Care Legislation now that does it for this hour of squawk on the street. Lets send it back down to the New York Stock Exchange for the start of squawk alley. Back over you to, carl dom, thank you very much. Good morning its 8 00 a. M. At netflix headquarters in california 11 00 a. M. On wall street. And squawk alley is live good tuesday morning. Welcome to squawk alley. Were at post 9 at the New York Stock Exchange this morning. John broad joins us, cofounder and president at confide and roger mack in a my go m