470 of them front office jobs. Now to carl cant ania and the beginning of squawk alley. Good morning. It is 8 00 a. M. At apple headquarters in cupertino. 11 00 a. M. On wall street, and squawk alley is live. Good tuesday morning. Kayla is off, but with us as always john and myself at post nine. Joining us today jessica lessen, the founder of the information and cnbc contributor. Jessica, great to have you with us as well. On a crazy day, cramer called it an emotional opening, and it was certainly that. Were well off the lows. Oil has gone green after a miserable morning. Lets start with the markets falling, of course, since the open right now. Dow down 86 points. S p is down about seven. We mentioned oil going positive. Our bob pasani on the floor watching everything. Bob. We are in the middle of a modest rally. Remember, we were we got down 20 points in the s p 500 right at the open, and we have more than half that with the s p down only six points. Lets take a look at the market internals. Give you an idea of what were looking at. It was a crummy open. A 101 declining to advancing stocks. That has now been halved. Its still not great, but a lot better. New lows have expanded. Over 300. Theres about 2, 500 stocks that matter at the nyse wroosh lets do the math there. Thats one out of every eight stocks. Its higher than recently. Its a modest up tick in volatility. The vix is about 17. Thats not in alarm bells territory, but its been moving up in the last couple of days. Some of the energy names are at new 52week lows. Theyve come off of the lows in the last hour or so as oil has come up. You see some of them are positive. Transports of the other group, these are industrial stocks that have been hitting new lows, lug some of the railroads like union pacific, kansas city, ryder, ch robinson among the logistics companies. Also on the up side. What you can see is this huge divergence between the dow industrials and the dow transports. With the industrials down only 1 , the transports down more than 15 , and thats because many had of them are involved in the transportation of the commodities, and we heard about all sorts of issues around that recently, lug this morning with some of the Big Companies like angeloamerican commenting on that. A small group of industrials are also hitting new lows. Some of the engine Companies Like cummins and paccar. Owens illinois, another one thats in among the new lows groups. If you want to know how difficult it is to be in the commodity business, angloamerican is in the big commodity businesses. Theyre in the coal business, the platinum business, ironore business. They announce theyre cutting their dividend. Theyre eliminating their dif depped at least for the time being and selling assets. The important thing here is they are in those businesses that are most affected. If you look at what theyre doing here, about onefourth of their business is the coal business. Onefourth is platinum. Onefourth is iron ore. The one bright spot is they are the biggest diamond producer in the world. Even then in their commentary they said the diamond business is not doing that great, although some are in better shape than the others. Three out of four of the businesses are in certainly a recession and arguably a depression. Anything in that sector right now, of course, a terrible time. You saw that awful angeloamerican chart. Right now were moving up here. Were only down 4 points. We could go positive in the next couple of minutes. First up this morning, republican frontrunner donald trump once again getting headlines after calling for a ban on muslims entering the u. S. This comes as many in both tech and government now confront the question about how to handle terrorism and social media. Senator feinstein could introduce a bill requiring social media platforms to Alert Federal officials about terrorist activity. Google chairman said we should target social accounts for terrorist groups like the Islamic State and remove videos before they spread. Another thing he talks about the difficulty of rying to shut down isis accounts or proisis accounts before new ones pop up. In some cases they pop up hundreds of times and even celebrate the hundredth new account by sending pictures of birthday cakes. I feel that some of the voices are becoming unhinged here. We mentioned trump, this idea for certain religions entering the country. He also said about calling up bill gates and shutting off the internet in some of these cases. We really need to get people who understand technology and know what theyre talking about getting together with policy people to figure out what to do here. You cant call up bill gates and shut off the internet. He makes the point. Look, technology does not run itself. Were still in control of this. What do you think the immediate policy proposals might be . Heres what we have to remember, carl. Whatever the policy proposals are up front, theres this is all going to happen behind the scenes in terms of negotiations. The Tech Companies and social media sites, theyre already trying to police. They do believe its a slippery slope with free speech, but theres going to be a middle ground of where government and companies are going to work together, but its not going to be in the headlines. Its not going to be in the bills. Its going to be in sort of the back room negotiations. It could be monitoring peoples accounts in realtime and alerting government officials to certain things. There are all kinds of ways that that could be used similar to concerns after the patriot act had been on the books for a while. How much are people in tech talking about the longer term implications of policy that is are created in moments of no doubt this is a big determine for facebook, for google. They see a real Reputational Risk in things like the snowden incidents and the continuing discussion. Their users dont like it. They believe. Now, they say they have data on this. Of course, you know, that could be up for debate. Maybe you could argue that users would love them to be more pro active. John, this reminds me of the encryption debate that the Obama Administration backed off of. I was in london last week, and its still raging there. The question of whether services should be allowed to have end to end encryption that make it impossible for Government Agencies to top some of those conversations, i think its important to note that the u. S. Has backed away from that under pressure from these Tech Companies and i think thats important context for the new terrorism debate as well. Is it your sense, john, that the engineering is capable of doing what we want these platforms to do . I mean, is this fixable . If we manage to come to some agreements is it fixable . With an astericks. That is you can do all kinds of things in monitoring, but you are doing it to the entire platform in order to adjust for a really small bad actor segment of the population. Do you end up ruining the platform longer term in order to deal with a problem that could be dealt with perhaps more surgically . I think Tech Companies are cautious about letting their policies and their product road map be set by political pressure which might not be as sober as it needs to be. Its a good way to put it. A new report from the information, jessica, says that this years lackluster tech ipo market now hurting employees of startups. Many who accept Stock Options as part of their pay. Stock options typically about 10 years old and stocks do, of course, have time to rise over time, but a great piece. Your team calculates at least 25 of etsys options are under water. Square its 19. Box, 15. Talk more about this grate piece you had today. Thanks, carl. You reported the stats. These are sizable amounts under water. Prices can go up. These are held for longterm. This creates a lot of challenges for the company and for management as well. In morale, in managing employees. Particularly as the tech market is getting quite competitive. There are a lot of options out there. We hear this is definitely an issue on the minds of a lot of Management Teams. Employees obviously concerned, though i think there is still the conviction that the Big Companies are going to weather through whatever cycle changes we have, but something were watching very closely, particularly as were trying to understand how aggressive valuations have been. Talk more about the impact that you expect. Companies that either have a whole lot of cash or a whole lot of control from the executives to the top, they could always reprice options. It seems to me if the population feels like these companies have great prospects for the future, and this is just temporary, there can be an advantage to the stock being down. Hey, people didnt want to join the company when the stock was high because they figured there wasnt much up side. If you believe in the future of etsy, maybe now is the time to join. Who does the balance of power shift to in the competition for talent in this kind of environment where you have options where you have reported they are . The competition is so fierce and escalating that i think it could be a slippery slope. The Talent Crunch is severe. You could sell a story to someone to hold out and that theres going to be a lot of up side, but that person is going to have a lot of other options. Uber is sucking talent every day. We hear it in the valley. I think its going to be a tricky period to navigate through. Plenty of companies have done it. Facebook preipo had down rounds, had periods where they weathered through this. The good ones always get through it. The bad ones are going to have a shakeout. Yeah. For facebook its a long way. Since the low 20s. I remember that. Jessica, its great having you. Thanks again. Thank you, carl. Jessica lessen with the information. When we come back, more originals coming from netflix at early netflix investor will tell us from he is worried about costs going higher over time. Plus, an early review of alphabet. A top analyst will tell us why he is upping his price target by more than 100. Well get another check on the markets as pasani said wrerl. The session low is down 220 or so on the dow. Were now down 83. S p once again positive for the year at 2070. Were back in a minute. No matter how fast the markets change, at t. Rowe price, our disciplined investment approach remains. We ask questions here. Look for risks there. And search for opportunity everywhere. Global markets may be uncertain. But you can feel confident in our investment experience. Around the world. Call a t. Rowe price investment specialist, or your advisor. And see how we can help you find global opportunity. T. Rowe price. Invest with confidence. Shares of netflix after falling flat after concerns about increasing cost pressures from Global Licensing deals. Obviously still the s p leader this year. Its up nearly 160 . Facing some new pressure, though, from amazons rival streaming service and starting today amazon will let prime users add Networks Like showtime and stars to their subscription. First time stars is being offered outside a traditional tv bundle. Joining us this morning is Foundation Capitals general partner paul holland, foundation, of course, led netflixs series c back in 1999. Paul, its good to have you back. Good morning. Good morning. Thanks for having me back. The stock chart would suggest theyre going to get the benefit of the doubt here in the early going, but when it comes to cost, what do you think investors are reasonably prepared for . I think you have to kind of step back a little bit and try to understand the landscape of whats going on with a company like a netflix. First, theres really two things to Pay Attention to here. One is content. It started with house of cards, which was just amazing, but its just going on and on and on. Shows like narcos. Very exciting documentary called maiden trip that i referred to you guys. I was referred by a high level source at the company to that particular one. Chelsea handler has hey new series of documentaries coming out. Thats coming out in the netflix brand. Lots of very interesting original content. On top of that paired with the best Management Team in american business. In fact, if i dare say so. Its the Golden State Warriors of American Management that we got over at netflix today. Theyre 220. Maybe not 220. Maybe 202. You just gave me the stats on that. Content is a big deal. Theyre making some very, very smart deals. Theyve been doing it for years. They did it before people realized they were doing it, and i think theyre going to see the benefit of that for quite a long time. Paul, one of the issues, though, is the nature of these licensing deals whether theyre local to the u. S. Or whether theyre global. Netflix needs global content as International Expansion becomes an increasingly important part of their strategy. My question is it seems to make sure if theyre spending on content if they can make that much more money based on spending on that content. Is that whats going to happen here . Can they charge enough for 4k streaming . Will they get enough benefit in the immediate wrum term from International Growth to justify this expense . Well, so far from what i have seen in published reports, the International Rollout has been fantastic for the company. I have no reason to believe that thats going to change any time soon. If we think about it this way, think about what Mark Zuckerburg talks about with facebook, right . Theyve just passed the billion users on the way to the next billion users. Now, how many of those people are going to want to have content delivered on all their devices, the various kinds as the world becomes wealthier and as more and more people enter the middle class. Netflix has a very large market in which to play. Im sure theyve structured these deals at a very, very smart way. Folks like ted, cindy hollands, reid hastings, the team at netflix. Very smart people. I have no reason to believe that theyre not going to continue to knock down these successes over and over again, but i do think youre on to the right track. International is going to be an increasing part of any american based wreed companys business, and netflix starts with an incredible base here, and i have no reason to believe that theyll do anything other than be successful. Ill tell you within thing, paul, theyre going they already have learned sort of what weve known in the cable business and the programming business for a long time, and that is that hits are hard to come by, right . You got to have a big one to make up for all the losers you were bound to have. Yes. Its a lot like the Venture Capital business, for example. Yeah. Were going to find out how good the programming is and theyve already, as you said, had a lot of success to show for it so far. Paul, thanks a lot. They do. Paul holland from foundation capital. Of course, netflix still the big gainer of the year. Indeed. Speaking of big names speaking at Business Insiders ignition conference today, including comcast ceo ryan roberts, our boss, since comcast owns nbc universal, and julia joins us with highlights. Julia. Hi, john. Thats right. Comcast brian roberts, the big keynote here at Business Insider ignition this morning. Showcasing comcasts latest video interface for the audience here in light of questions of cord cutting. He is addressing what he called a dilemma. While its business focus is offering bundles, it doesnt want to be stuck only with them. A big part of what weve been trying to do is offer new products that dont have the big bundle like stream, like, you know, xfiny plus or broadband plus hbo go and other products like that with broadcast and not have a one size fits all model. Roberts defended the value of advertising on traditional Linear Television saying that even if the number of eyeballs is shrinking, you still have the most eyeballs on live linear tv when its the place to go to say advertise a movie opening the next day. Roberts also talked about how comcast is working to maximize the value of its content by offering more of that content on demand to protect rather than cannibalize its core business. Theres a conversation thats constantly evolving of how can we give more value and at the same time not completely eviscerate a revenue, that is helping, as you said, pay for the cost of producing that content. Ill be here reporting from the ignition summit for the rest of the day today. Next up we have verizon ceo Lowell Mcadam coming up on fast money halftime report. It will be interesting to see what he says about their investments in video. Yes, indeed. Thank you, julia. Up next, stocks bouncing back from this mornings low. Right now lets see the dow is down about 70 points. Its been close to break even. The next big cat les for todays session, of course, the close in europe. Well bring that to you live when squawk alley comes right back. Lets count you down to the close. Of course, a lot of red as weve seen here all morning. Stocks are racing to their gains earlier for monday. Falling in reaction to some weak export data from china. Obviously, the lower commodity price. A rough day for mining stocks. Anglo america cutting 85,000 jobs as part of a restructuring. Take a look at the euro, of course. The e. U. Statistics agency saying that growth slowed to. 3 in the third quarter. That was essentially in line with expectations. A lot of volatility continues in the international markets, and obviously here in the u. S. Today. We were down 240 or so. Dow down about 90 today. Dale winter, Portfolio Manager for the Global Equity team at Wells Fargo Asset Management joins us at post nine. Its good to have you. Good morning. Good morning. You like europe relative to everything else. Yes, we do. Were constructed on europe for three real reasons. Better valuations, better earnings, and better qe c