Little homage to netflix as Stranger Things debuts im Carl Quintanilla with Michelle Carusocabrera and john fortt at the New York Stock Exchange joining us, Scott Galloway, author of the four, and with us, as well, lead internet analyst mark mahaney obviously, guys, we know the top story. Shares of amazon, alphabet, microsoft, intel, soaring across the board, pushing the nasdaq to another alltime high. We had a parlor game this morning about which move this morning is the most impressive of those four. What would you say of those four, lets see, just had the acceleration, at least in the internet names, and it was pretty clear and even across a bunch of geographies and product lines, whether amazon with retail and cloud or google with advertising, even search advertising is accelerating and also with their Cloud Business and maybe with their hardware business, so another word for these names is acceleration stories and stocks typically go up with that. Both are aggressively investing in new opportunities thats a good thing for longterm investors. We like them both. Scott, for me the most impressive is microsoft, because, intel is in there, too, sure, but this is a name that a lot of people had given up for dead, thought they missed mobile, that they were going to miss the cloud, yet engagement user numbers appear to be up pretty much across the board for them, even in the pc category, where intel did well, as well. Scott, away from the amazons and googles, what impressed you about these numbers . Yeah, youre right. Downward momentum is really hard to reverse and just as best buys turnaround in retail a couple years ago was impressive, microsofts, hard to call it a turnaround, but microsoft is arguably now punching in this weight class and continues to get stronger and stronger and is not befuddled prey waiting to be attacked by amazon they are attacking amazon with the cloud. I thought the most interesting number, and id love to get marks view on this, is google reduced their cost per click by 23 , meaning that if youre selling advertising on tv or print, youre now competing with a competitor, google, for ad dollars whose product has not only got better, but lowered their prices 23 pity anybody selling television or print advertising right now mark . Thats true i think another word for internet has been deflation in a variety of areas, whether thats advertising, retail, travel, media, and these sort of lowcost providers that are coming in and disrupting industry after industry. Scotts right. Look, the biggest risks on some of these platform names, theres government, maturity, and competition and youre seeing these Companies Increasingly swim in each others lanes i worry about amazon getting more and more into advertising, which is googles bread and butter worried at all about amazon getting into nearly Everything Else saw the pharmacy benefits managers, cvss of the world get hit yesterday when we heard amazon is talking about now prescription drugs and when we see the deal with etna and cvs, one of the reasons is they want to bully the ramparts against amazon what do you think about amazon getting into this space . Is there risk of them overexpanding into too many spaces one of the fundamental tenants of business academia was core kpen ten competency, you n focus op one area. Im worried for other companies. If you look where amazon is bumping up against the other three, apple and voice, they are literally kicking the butt of siri they are the most innovative hardwa hardwa hardware production now, i believe their Amazon Media Group is growing faster thangoogle and almost as fast as facebook they are number one in the cloud and the mother of all celebrity death matches coming our way in 2019 is going to be amazon as it runs head on into netflix. Thats going to be a real ali fraser of the information age. Scott, would you argue amazon fears that battle more, the amazon video versus netflix, or is it more of an aws azure battle i dont think they fear anything i think amazon is feared my sense is they are not scared of anybody right now they are afraid of making phones, or should be this is the day where we see sixweek lead times on apples thousandplus dollar phone so i dont think we can say amazon is the unchallenged in hardware by a long shot. Most innovative hardware product, apple watch, apple pods, what was more innovative than the amazon echo what product has changed the Business World more than the echo apple sold more units and made more money. It depends what were counting, but point taken. Two different points. Ask Alexa Mark Alexa is a good thing mark, lets talk about cost we know q3 is usually expensive as you roll into holidays, but amazon costs up 35 how much of a free rein do they have to spend as much as they think is necessary from a wall street investor perspective, if they show Revenue Growth acceleration, they get a free rein i think the company knew this. I have a sneaking suspicion they realized they were about to hit a pocket of acceleration they can see the stuff in advance. They knew that, so they entered into another investment cycle knowing theyd get a pass. You know, history has told you, i think, that they usually get a twoyear pass, maybe three years from investors because of all the investment, you know, benefits theyve gotten over the years or the new products, categories, areas theyve gotten from investing successfully, but make no doubt across the internet, whether its netflix, google, facebook, amazon, none of these companies are going to show you Margin Expansion in the next two or three years. They are all going to invest for new Growth Opportunities i think thats a good thing. Dont count on Margin Expansion. Mark, any of these stocks cheap or too expensive well, look, ill make a real strong point about being cheap we refer to these companies as internet staples you know the term Consumer Staples. Google, i think, is an internet staple 30 straight quarters of 25 operating margins, very consistent, and you can buy this at a modest premium to the market if you adjust for cash, its like 18 times earnings there are Consumer StaplesCompanies Really well known that trade at premiums to the market that will give you 3 Revenue Growth the market is giving you google at a modest premium to the market i think the valuation is very compelling just watch for the government risk its certainly being noticed today, but overall its been restranr restrained guys, thanks so much scott, mark, see you soon. Thank you thank you we were just talking about the latest iphone x, watching latest from apple and the huge demand for its newest iphone x josh lipton is out west with more josh michelle, the iphone x became available at 3 00 a. M. Eastern and shipment lead times quickly surging for the device in a statement to cnbc, apple saying we can see from the initial response customer demand is off the charts. Were working hard to get this revolutionary new product into the hands of every customer who wants one as quickly as possible on the companys u. S. Website, the lead times quickly stretched to two weeks, then three, now around six weeks investors dont know for sure whether thats all due just to Strong Demand or also in part to reports alleging there were production issues, though apple, remember, completely smacked down a bloomberg report this week saying the company downgraded the accuracy of face i. D. To boost production excitement about the device has helped drive a surge of stocks this year, now up nearly 40 on expectations of a big upgrade cycle. Iphone x comes with the larger display, facial recognition, wireless charging, and a battery that lasts up to two hours longer than the iphone 7 starting price 999. How will consumers react will they switch to a rival device or just wait patiently until they can get their hands on this new iphone x guys, back to you. All right, john, thanks so much for that. Were watching those headlines when we first come back, a first on cnbc interview with the cfo of intel a lot more on cvss reported bid to take over aetna and a showdown between the u. S. And russia this time it is over oil when squawk alley continues. Alerts wouldnt you like one from the market when it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Watching for developments this morning in that search for a fed chair. For that well go back to Steve Liesman at hq. Steve . A source telling cnbc the president is leaning towards jarome powell, but that source also emphasizing the president has not fully made up his mind, it could still go either way lets look who jay powell is republican nominated by president obama as part of a deal to bring a republican and democrat on to the board Federal Reserve governor since 2012 concentrated a lot on the inner workings of the market in the post crisis world. He was a former partner at the private equity group carlisle and favors rolling back some, but not all financial regulations. One thing that could attract powell to the president , he defends the fed, which some republicans have criticized, but also sees a limited role for Monetary Policy overall. Well, Monetary Policy can contribute to growth by supporting a durable expansion, it cannot reliably affect the long run sustainable level of growth okay. Lets take a look at the predictive markets jay powell surging on these reports up 27 to 80 that means 80 probability john taylor falling now to 15. Yellen at 9, up a bit, and warsh and cohn above 4 there. Lets look at the twoyear, you can see yields fell. John taylor, the other sort of candidate here or main candidate, seen as being more hawkish, but just down a few basis points remains to be seen. The question you asked earlier if john taylor would accept the vice chairmans role on the one hand i think he wouldnt on the other hand, a request from the president , sometimes very hard to refuse. Michelle got it, steve, thank you. Pleasure. All right, when we come back, the cfo of intel on the companys earnings beat. The stock is moving higher plus, it would be the biggest deal of the year, cvs looking to acquire aetna. If it happens when squawk le rurns shes nationally recognized for her compassion and care. He spent decades fighting to give families a second chance. 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Bob, good morning. Good morning, how are you today . Probably not as good as you are, given how the stock is performing after that report quite a few areas to get to, but first what youre calling data centric business everything but the pc pretty much you say its now 45 of revenue, up from 30 five years ago youre calling it the Growth Engine for the future. What are the two primary things driving that business . Well, its interesting. Over the course in time the industry has evolved such that the demand for compute capacity and data and the need to store, retrieve, analyze data is a place where we believe were uniquely positioned to compete and win. The datacentric businesses are, essentially, the collection of businesses between the data centers, fpgas, memory, internet of things, this collection of things that individually each business over time has solved a particular customer problem. But collectively we believe we can solve problems that no single Business Unit or single product line can and as a result weve been investing both organically and inquisitively over time in this collection of capabilities that today has demonstrated the fairly dramatic growth that we highlighted yesterday. I want you to dig in almost approaching 50 i want you to dig in on what youre saying about fpgas. A lot of investors might not be familiar with what exactly that is basically, you have chips that are more customizable for customers. You called out microsofts plan to use that for Artificial Intelligence you guys invested in fpgas before there was all this talk so much about ai talk about how thats playing out right now. Yeah, its an area of growth to your point where theres very specific applications and work loads that need custom chips that will enable you to operate and run those work loads in different ways a couple years ago we had partnered with alterra for a while as leveraging our cpu capabilities and their fpga chips to deliver a better and better solution, particularly in the cloud environment. We made an acquisition alterra has been a very important part of putting the collective capabilities of what intel has to deliver higher performance in both generic and custom oriented ways for our customers, so its been an important acquisition for the company and together that is a key element of what you asked before, this datacentric collection of capabilities that has really driven the growth of the Company Going forward. Bob, is it time to do more m a . Youve done big buys, they appear to be successful. Investors perhaps can give you some leeway here a series of organic investments and the acquisition of alterra and mobile eye, weve expanded our overall served market from roughly 45 billion to today 260 billion, which has a much larger Growth Opportunity for the company. Alterra, mobile eye, as i said, have been very important parts of that strategy today were really focused on leveraging the collective capabilities of those companie and integrating those companies into the ebay portfolio. Thats where were focused now, getting the benefits of the acquisitions that weve made going forward. Bob, its michelle here weve spent a lot of time talking about crypto currencies. What do you think its going to do down the road and what do you think when you hear jamie dimon dump on bitcoin or prince alwaleeb do they understand it . Crypto currency is not a major driver of our Business Performance. Our Business Performance is about chips, software, hardware, to solve solutions for those who may be mining or analyzing things like crypto currency. Today its not a big growth driver for our business, and thats not where were focusing our time and energy. Bob, a few quarters ago you did a strategic shift about how to treat pcs, even somewhat the mid range. Now the pc business is performing better than a lot of people expected. Is intel correctly positioned to take advantage of that, and are you making adjustments because of what youre seeing in the marketplace . Yeah, the pc business has been the bread and butter for the company for a long time, but over the course of the last five years, unit volume in the pc market is down almost 25 . At the same time over that fiveyear time frame, our business has generated increasing profitability in a market where the tam is down 25 . And that has been a continuous focus on innovating around higher performance chips that are being used more and more often in more exciting applications like gaming and two in ones. So as a result, even in a declining market, our pc business has continued to hold or gain share, segment its products for the higher end, where customers are prepared to pay for what intel does so well, which is high performance. Its a very important part of our company. Its been executed extremely well, and were excited about the continued growth and profitability in a fairly tough pc tam environment yep well, investors especially seem to like the margins youre able to maintain in this environment. Bob swan, cfo of intel, joins us with the stock up about 5. 5 bob, thanks. Thanks a lot, appreciate it so just about 20 minutes ago venezuela announced its oil company paid a bill today. This is significant, because it means they have dodged a bullet. Heres the story, this had a basement of nearly a billion dollars due today. Whats significant about this bond in particular is that its collateralized against citgo, and if they hadnt paid it tlrks no grace period. The bondholders who control 51 of citgo in the case of a default, literally venezuela could have lost control of its