Skip to main content

tv   Squawk on the Street  CNBC  August 6, 2015 9:00am-11:01am EDT

9:00 am
available offline and now i have it available on my phone. >> do you use pandora, spotify? >> i don't know how. >> it has been fun. >> it has been real and real fun. >> i'll see you next week maybe from another country. >> who is going to be here tomorrow? >> becky. >> and you? >> i'm out. >> "squawk on the street" is next. >> sleep in, sleep well. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber from the new york stock exchange. a big morning of movers tesla, physical bit and bank of england making some noise. ten years up and oil within $3 of its lows for 2015.
9:01 am
bill ackman taking 5.5 in mondalez. those subscribers worries that originated with disney. >> a trio of stocks tesla, green mountain and fitbit, hit hard. our top stories are mondalez shares spiking. bill ackman disclosing that $5.5 billion shake in cadbury. they welcome pershing square as investors and will continue to focus on executing our strategy as we look at another sector where mass sick consolidation is the play. we have been through airlines and health care. now, it is food. >> we can remember that nelson felts has a 2.9% stake. i have to turn to you, david, with more than 10% being held by
9:02 am
you. i have to expect that. >> that's got to be the expectation in terms of the play for ackman jim. you and i have talked behind the scenes about what it was going to be. i have been chasing this for some time as many have. i have probably put on alert more bankers than we know about. i thought, what could it be what could it be? i don't think any of us would have expected it would be mondelez. they just reported a very strong quarter, by the way. there does appear to be the case for consolidation but that does appear to be the case over time unless mr. ackman knows something that others aren't aware of regarding their
9:03 am
ability to do a deal quickly, which doesn't seem likely after closing kraft heinz on the fourth of july. it is hard to guess where the consolidation case would come from. >> this was fascinating, because i know mondelez is a stock we have pushed on "mad money." win/win. the margins are better. the revenues have been weak. some of that is the strong dollar. still, a lot of opportunity to take these out. the growth plan really isn't going to start until the fourth quarter i looked at mon delez. they are all going higher. never figured out there was an activist buying or whether it was this clorox situation where people want safety and dividend.
9:04 am
>> for that to put 25% of your fund in the case of mr. ackman. you are getting paid 2 and 20 on that. he has to see something else perhaps. he certainly is always about proving everybody he is the smartest guy in the room. he has to see something that is going to prove that yet again. there is a lot of surprise that this is the name that many people have been wondering what he would land on. what's the extra trigger that's going to get the stock even higher if you are really committed to it? he becomes the largest chair holder today. 7.5%. he will be paid close attention by mondelez. >> my charitable trust owns heinz kraft. the same reason we own alaeghen. i don't think it is so hard to put the two companies back together. instant results. it was a pen that caused them to
9:05 am
separate. it can bring them back. >> you talked about this topic with ackman not too long ago. here is what he said. >> bill you have a new one, no mad, i love the food business. i think this is fantastic. frozen food. pinnacle would be a great acquisition. they have this great management team. that industry is still ripe for consolidation. are you thinking big nomad or a big food. is this the next kraft heinz or a company that will slowly make a lot of money? >> i think it will be a pretty dynamic business. we share the same executive chair with platform martin franklin. >> we all know martin from jordan, one of the greatest investors. jardan has been an amazing company. nomad could own many aisles.
9:06 am
>> it is a non-u.s. domicile company, a territorial, lower tax rate. you look at heinz-kraft, a lot of assets that need to be sold. this is a very logical buyer. we have one of the best deal maker operators leading the chart. that's going to be a good story. >> what's interesting about that, jim, that's nomad. he is involved with 3 g and all of these things. burger king, nomad and maybe he has a call on what they were thinking. >> it is a club. >> when it comes to consolidation. there, he as talking about nomad, this new listing which he and martin frank are talk about. >> with the idea that heinz-kraft is a bloated company. >> it takes some time after you close a deal only a month ago. from people who certainly know
9:07 am
they don't expect 3g would move that quickly. we'll see. >> it doesn't matter. the fourth quarter will be really good for monde llez. >> expecting the natural margin of products and geologygraphies is what they are. things tend to be a bit lower in terms of margin than they are here. >> heinz is a big emerging market. hersheys 44.6 gross margin. pepsico, 53. >> it does give more leverage to nelson pelts in the board room. velveeta, paul's candies and mondelez loveable cadbury brands. a win for everybody. >> meanwhile, media continues to be a big topic of conversation today. got some more big names out. viacom matching estimates and
9:08 am
missing on the top line. similar story at fox and cbs. fox down 5% premarket as revenues miss a new 5% buyback. cbs did beat on the bottom line. sales amiss as well. on the back of the big declines led by disney's steep fall. moonvest talking about how broadcasting is in better shape than basic cable. they are going to make 5 million for the first few minutes of the super bowl. pacquiao mayweather grossed 600 million. they said it is going to trump anything we have seen. >> i like that verb. >> here is the thing that i have problems with. cbs is a small company, small company these days. >> about half the size of netflix. you know where i'm going. in the end, it does have rights to sell. it has franchises and criminal minds.
9:09 am
it has csi queens not yet but probably in the making. i look at cbs. that's an interesting company. it is not growing that fast. i then come back to time warner which is such a great company. it fell apart. >> fell apart yesterday because they wouldn't reaffirm guidance for '16. >> they kept begging him to reaffirm. why didn't they? >> they say they don't own quarters. >> we are going to do more of this with some of the sound. >> i'm going to stick around. >> cbs continues and mr. moonvest continues to emphasize any of these new packages of programming, these skinny bundles, a smaller bundle that you pay less for. cbs is a part of it. the streaming options cbs is a top. he keeps saying we are going to benefit. it has never felt more strongly than the equity markets than
9:10 am
yesterday, whoa, whoa. >> it was frightening. for one moment i thought time warner had gone into the oil business. no time warner. wait a second. >> how about discovery? >> is that labor day party still going to be on. >> comcast was not a broadband company anymore. it was a media company. >> a mid stream, continental oil distributing media company. >> $180 million market value down 5 percent. you are talking about significant loss of market value for so many companies. >> let's go down to disney for a second. a lot of other businesses. they are growing incredibly well. were we tough on bob iger yesterday? i think we were fair. >> some said we were myopic.
9:11 am
>> i think it was the story of the day. >> we could have talked about the reasons why it went to 122, star wars and shanghai. a lot of people were not thinking about this some sub losses. had they said, listen it was "x" number, i think it would have been down five not ten. last night, i said on "mad money," enough is enough. this is ridiculous. wiped out all the way back to the may quarter. that's wrong. this time next year this company looks very different to me. i don't think we will be looking at espn costs. i think we will be looking at the end of shanghai costs. estimates were 272 ahead of the job reports. that means one day left to nail the number. tweet us your positions for
9:12 am
july, not farm. the hashtag, nail the nup. the lucky winner will receive a alpha tote bag autographed by all of us here. you will have until one minute before the jobs report release. >> i just want to know the china nonfarm payroll. >> 100%. there are no people that don't work. they put them to work on the aircraft carrier. the china labor report the nonfarm labor. a lot of farmers there. >> whethern we come back, shares of fitbit taking a big hit. we are going to talk to the ceo coming up. an 11% premarket decline. >> planet fitness making their wall street debut, handing out bagles. their first trade in a live interview with the ceo. take another look at futures where a lot of the volatility not reflected in the broad averages. a slight up open. back in just a moment.
9:13 am
opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score powered by starmine, will help you execute your ideas with speed and conviction. and it's only on open an account and find more of the expertise you need to be a better investor.
9:14 am
9:15 am
. the number of momentum names getting hit after earnings. tesla, a smaller loss than expected. cutting its forecast for car
9:16 am
sales. down 7%. do your keurig green mountain down 30%. fitbit, down double digits despite a monster quarter. margin weakness worrying some investors. they see 7-10. street is at 7. >> this is one where the numbers were superb. when we speak with the ceo, you can't run your private company when you are public. you can't say stay tuned when people ask you how are things going? you can't say, wait until you see what we have. these analysts are constrained by the four walls of the campus which is how to do a spreadsheet. if you take that away you say, listen, this is really terrific. they did great mother's day, father's day. there is no holiday this quarter. how do we gauge it?
9:17 am
don't worry about it. we are doing fine. >> sales go from $113 million to $400 million. >> this was a fabulous quarter. no fly zone. no one is going to come up with a fly zone. they might say, how about giving me some other guide. 50 of the fortune 500 companies adopted this device. do we care about the amazing race ad campaign. how about espn inventory is up. they are all about trying to figure out what's going to happen next. the fitbit guys are like stay tuned. it is not like a trudy tech tiffe detective. this is not an hmo cinemax
9:18 am
production where we wait and see what happens. it is a company. they have to play by the rules and or they suffer from it is run from 1 to 20. >> the green mountain results, after lumbar liquidators and etsy, 28 and 29% gone in marquette cap. cap. >> if you want to know what this is like, go on their conference call. it is okay to not have a buyback when you are doing as poorly as you are doing. every number is down. >> what were the assurances? this quarter is going to be better. you don't get all these analysts down grading it unless you felt like it was a misdirection play.
9:19 am
a lot of people felt the handoff was to demarco murray. it was a pass play to an unknown receiver. >> who dropped the ball. >> they did it so well green mountain. the camera got fooled. they stayed with the running back. it was a pass play. these analysts are looking like are you kidding moo hee? they are like line backers grasping for air. >> they cut their guidance. pod sales down for the first time ever. they cut 5% of the workforce. revenues below. >> if they cut everybody, would their margins go higher? >> yeah top line might suffer. >> three engines are going down on the plane. it is burning a lot of fuel. if you cut off the fourth there is no more burning fuel. then, this cold device they have to keep spending on it. makes it feel like it is not working. coca-cola has a call on green
9:20 am
mountain after they tumble post earnings. >> i like goldman cutting from 120 to 66. morgan stanley, 110 to 60. >> its headed there. i kept thinking, give me something, give me a reason. kind of like the earth, wind and fire song give me a reason. >> the only thing i can give is a couple of inversions. we can talk about them later. this is the kind of inversion i am doing. the numbers look a lot better this way. >> one more look at the futures here. we're back in just a minute. don't go away. td ameritrade, they're always working. yup, we're constantly making thinkorswim better. like a custom screener on your desktop, that updates to all your devices. and you can share it with one click. wow. how do you find the time to do all this? easy.
9:21 am
we combined every birthday and holiday into one celebration. (different holidays being shouted) back to work, guys! i love this times of year. for all the confidence you need. td ameritrade. you got this. when you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about. that's where at&t can help. at&t has the tools and the network you need to make working as one easier than ever. virtually anywhere. leaving you free to focus on what matters most. ♪ i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio.
9:22 am
♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet? more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. because it's so challenging a research project is teaching ibm watson to see. in the future, it could help clinicians spot key patterns quickly and precisely. ibm watson is working to make healthcare smarter every day.
9:23 am
we've got a little time for a mad dash with seven minutes before the opening bell. so many things to cover. you and i have yet to get to the mlps and the oil and gas industry. so many other things. let's talk a little bit about apple. >> josh lipton had a terrific report. he spoke about it. this stock has been down. if you look at this what you'll see is the chinese stock market this whole decline, meaning that people felt iphones fell off a cliff. i am taking a leap of faith here. the actual apps are decent the number of downloads, are a decent proxy for china. what it would look like to me,
9:24 am
they are still good in i allot of stores in places they haven't been. those have not been heard. the proxy says china is not as bad as the bears say. the bank of america, the reports of the death of china, apple, are premature. >> you think that down grade yesterday will mark the bottom. >> it is such a tough market. it might not be. i would point out that this is the really important point, david. this company was -- all the growth is apple. people are presuming it is bmw and gm. those are ones that sales went like this after the crash. by the way, we are not going to see 1 billion offering by howard schultz because he is not running for president. >> is it starbucks? is apple starbucks? no, because that's $5.05.
9:25 am
is it johnny walker blue sales really bad there. i don't know. is it gm? i don't know. it is a weird price point. i say josh lipton's report says a successful july for more than people think not perfect but better than people think for apple and china. >> there is one we can take care of now before the opening bell. we have a lot more business to do, including the ceos of fitbit and planet fitness. they are misspelling judgment. >> shakespeare spelled it that way. you should brush up on your shakespeare. >> kiss me kate. my name is mark amann. i'm a gas service rep for pg&e in san jose.
9:26 am
as a gas service rep we are basically the ambassador of the company. we make the most contact with the customers on a daily basis. i work hand-in-hand with crews to make sure our gas pipes are safe. my wife and i are both from san jose. my kids and their friends live in this community. every time i go to a customer's house, their children could be friends with my children so it's important to me. one of the most rewarding parts of this job is after you help a customer seeing a smile on their face. together, we're building a better california.
9:27 am
want bladder leak underwear that moves like you do? try always discreet underwear and move, groove, wiggle giggle, swerve, curve. lift, shift, ride, glide hit your stride. only always discreet underwear has soft dual leak guard barriers to help stop leaks where they happen most and a discreet fit that hugs your curves you barely feel it. always discreet underwear so bladder leaks can feel like no big deal. because hey, pee happens. get your free pair and valuable coupons at always shopping online... as easy as it gets. wouldn't it be great if hiring plumbers carpenters and even piano tuners... were just as simple? thanks to angie's list now it is. start shopping online... ...from a list of top rated providers. visit today.
9:28 am
you are watching cnbc "squawk on the street." live from the financial capital of the world. opening bell in a few seconds. >> we have covered so much from mondelez to fitbit to am.
9:29 am
l.b. had comps out for july. 3% beats 2.3%. cosco too. >> these are so hard to read. i am looking for gasoline as a reason to buy these. it hasn't really read through. l brands is a suspended animation, i think. unimportant month. what do we do with it? the answer is i think you continue to ride the gasoline trade. i hear buy lb don't sell. the apparel stocks are on fire skechers nike under armour. that's what people are buying with their spare change. >> washington post has a nice piece on the rise of athletic leisure. industry-wide, 12 months ended
9:30 am
june. sales up 21%. they point out even ann taylor is launching an athletic leisure chain called blue and gray. >> everyone is taking it from adidas. they don't really know what they are doing. >> there is the opening bell. a look at the s&p at the bottom of your screen. on the big board, planet fitness. the whole room is purple even jim's tie is purple. when the stock opens later on this morning. over at the nasdaq immune therapeutics, a development of treatment for peanut allergies celebrating their ipo today. as far as tesla, people look can at the cash levels 1.15 billion down 8.8 billion year on year. their guidance for deliveries gets trimmed a bit. >> it is tricky. there was a question asked about
9:31 am
whether they need funds and basically basically musk who remains the great magician of our time. a showman, that's a better word for him. there will be a capital race. i think people are looking at 20.20 for this. the bears want you to focus on day to day sales. the bulls want you to focus on 2020. because of low inflation, people believe in the long-term. the bulls are going to win out. talking about raising the money will be successful. i'm not talking about the sales, which were disappointing. i'm not talking about the gigafactory.
9:32 am
>> i am saying they left open the financing. if they get it that's a key prop the bears withily not have. the company has a huge cash market. >> i say it is a cold stock. this is not like what i believe. i say, listen if you love tesla, you can buy this stock. i'm not going to stop you. you have every right to buy whatever you want. >> a couple of transactions both inversions that word we use and have talked about for a number of years by which companies that have a tax jurisdiction or are incorporated in the u.s. move to another country with a lower tax rate and before irregulars were changed to treasury, were able to can assess their overseas cash in a much more effective way. a lot of the loopholes have been closed. with he get we get two inversions, cf combining with opi global distribution business. this will become the largest nitrogen player in the world.
9:33 am
cf is moving to the u.k. that will be the impact a subsidiary of a new holding company domiciled in the u.k. where the tax regime is of a lower nature than the u.s. it is a somewhat complex deal similar to ones we have seen in the past where this company is merging with the unit of the other one to combine the new company which is redomiciling. remember, milan and the piece of abbott that they did. endo when it got together with i don't remember where it was. then, you have coca-cola enterprises, coca-cola iberian partners and -- to form european partners. coca-cola european partners will be incorporated in the u.k. two inversions to keep an eye on
9:34 am
and the stocks involved as well of all those mentioned. >> i think that's great to point that out. there are companies that are doing inversions and the numbers just keep. people love the numbers. guess who is back in the news? there is allerghan. >> the old activist. >> and brent saunders on "mad money." does he need to do a deal. $40 billion of that. >> the question for allergan is not just whether it is when. >> i refuse to play. >> having an assumption there is going to be more consolidation in the phrma industry is probably pretty good whether it is allergan buying something down the road or a biotech deal
9:35 am
in the nearer term of some size, we'll see. some of the surprises of the week we had kate with their good comps and coors is the secretary biggest gainer on the s&p. >> if you continue to cut numbers over and over and over. >> this was a day where literally you could have bought any kors or tap. sometimes they buy the wrong coors. if you bought pbr and mistakenly bought petrabran, doesn't taste nearly as good. >> a lot of people believe there will be consolidation. they believe that abi will buy sab. the belief is that if that happens, they have to difficult
9:36 am
vest ownership with tap. the big winner is mostly kors and they are happy. >> corona people are presuming that that deal happens. you win either way. i am surprised there isn't an activist. the activists like to go where they can win. media stocks were one thing. what's going on here. i am looking at marvest energy. >> greg armstrong, the chairman and ceo of plains all-american if you listen to this quote, we have always felt these were tow roads. he is talking about competition. when you cut production the way people are, you don't want
9:37 am
competition. if iran comes on and they don't make room this is the middle east. it could get ugly a little longer. talking about the fact that the middle east is flooding this country with oil. what is interesting is markwest is nat gas. they are in incredible demand. is markwest a buy? it is still under pressure from hedge fund and double levered to catch the distribution. after today, you might want to look at this group. stay away from the logistic crude pipelines. that's where the pressure is going to be. if you know this group, you know which ones i'm talking about and go with the natural gas pipelines. >> goldman saying on crude, risks remain substantially skewed to the down side. the low for the year is 4203. we are just a couple dollars away from that. >> if the president is right, the president wins, then greg
9:38 am
armstrong would tell you, we are going to slice right through that like a knife through butter. >> let's get to courtney reagan. >> we are losing steam in the first couple moments of trade. we started higher but now we are lower. a relatively quiet morning when it comes to economic data points. we did jobless claims in line with expectations. this ahead of tomorrow's jobs report. asian markets, mostly lower. goldman sachs saying they believe chinese authorities will step in and inject liquidity. european markets pretty quiet, mostly mixed. bank of england leaving those unchanged. european oil and gas are lower dragging down some of the industries. lower today at wti continues to fall more than 1.5% this morning. if we move on to the individual
9:39 am
equities a number of big movers despite the ave fairly muted, let's talk about what's going on with coca-cola getting three bottlers to merge together. a ten-year bottling agreement is a pretty big deal. kram are stole my joke. coors and kors. let's start with molson coors. an issue for that beer company. michael kors another surprise to the up side in the handbag market. crushing those earnings per share, better gross margin lower expenses reaffirming the full year guidance. analysts like that. profit is still down year over year. it posted its second straight quarter of negative comps. remember when we saw those comps that used to be astronomical. that is probably going to be in the past. they are down 47% year to date. a lot of negative sentiment
9:40 am
going into that. we cut back on those promos. that did appear to work for them. strengthen international wholesaling. that was good for that retailer. if you take a look finishing out with some of the same store sales report. limited brands and costco beating the street with their results. however, shares of both are marginally lower. as we throw back to you, it looks like the dow is down 58 points and we have lost a little bit more steam during the last minute or so. back to you guys. >> disney is down 2.5%. leading me to edyesterday's story, which is still today's story. yesterday made me look back on sort of a historic day in some ways in that so many for so long have focused on this idea of will the bundle hold?
9:41 am
when will we start to see erosion on the subscribers roles and, therefore, less revenue because you have fewer subscribers going to those that provide the content to the distributors? less advertising dollars as they shrink. though so slight it may have been for those that believe this change is here. we have all said it will be slow at first and then sudden. now, the question is are we in the sudden part not that the bundle is going anywhere any time soon in the sense it represents great economic value for many households. the idea of growth, that seems opposite. yesterday, we heard from a lot of companies. i want to start with fox and viacom. it is down over 9% after reporting earnings las before the bell this morning. it was $1.47. it is not being well received at all this morning.
9:42 am
i have not had an opportunity to listen on the call. i'm afraid i don't have much to share from what they may or may not have said. you can see the impact. one has to wonder given the amount they pay their ceo what they are thinking in terms of leadership. >> fox, has new leadership. james murdoch is running the show. lockman, an executive chairman along with their father mr. murdoch. so far, not so good. that number that fox reported was they took their numbers down a bit. a need to invest in the network overall. you know what's funny. the sub numbers yesterday were one of the strongest parts of many of the reports. many say it was completely overdone, jim. i did have a chance to listen in on charlie ergan. they benefited. here is what he had to say about the balance of power between content and distribution.
9:43 am
>> the balance of power in content has moved from typically, it used to be it was pretty even between content and distribution. it recently has moved to content owners to have more leverage. it is coming back to the distribution for a variety of reasons. it has totally shifted to netflix, the most powerful content aggregator in the world today. nobody even close. >> netflix stock is up 2.5% as we see dish which added 169,000 streaming subscribers. time warner for its part. yesterday, we told you the numbers were good. they said $6 in 16. they wouldn't do it. here is the sfo from the call. >> we are aware of some of the times that you just talked
9:44 am
about. we don't change our update on long-term targets from quarter to quarter. we are very pleased with how we are operating. you can see that from the strong results that we generated. we are going to provide greater specificity on our long-term outlet at year-end. >> i was interested to see how we did day two of what we call the day the bundle died. so far, nothing good for those that are allowing these stocks. discovery, down. time warner down over 3%. viacom picking up losses over 11%. carl mentioned myopic. i was on the time warner conference call. everything, i don't mean some things. everything was good nd athen you got to that "q" and "a."
9:45 am
analysts need their hands held. >> yes they do. if i'm jeff i would say, why don't we give them the darn number. we just lost market cap that is equal to that. >> more than equal. >> some of the guys should have gone and bought some. disney again, they conflated the foreign exchange with the sub-loss. they have given up too much. look, is disney a buy at 107. can we go long-term, maybe six months from now or a year? let's say star wars opens big right now. i think you will say, geez i should go buy some. i recognize the power of the people that feel that this story is over. i think that's not true. there is a rerating going on in the media industry. >> that we have been waiting for. >> we had a lot of takeouts takeovers. >> we might have more z really. >> now, viacom is a controlled
9:46 am
company. i don't want to get anything started here. let's get to rick santelli who joins us from the bond pits in chicago. good morning, david. many traders continue to monitor fed fund futures, not necessarily in the same way they used to. once the fed picked a direction, whether it ways tightening directions or easing directions they tend to be highly indicative of where the fed will go on the next move when you are within six, seven weeks of meeting, if you look at the contract that coordinates with that meeting. with rates at zero for so long it is very difficult to think we know where the dot is that you see saying you are here. making it easy, they still close november and december futures. the lower the price, the higher the probability. maybe a titan is moving closer. monitor that. a little bit of volatility. they are dipping. reach down a couple of basis
9:47 am
points. when you look at the two-day, it cements the notion. if you look at the market since june 1st here is what you are supposed to see. the yields on top are lower successfully and the bottom the low yields are also lower. we might see more buying pushing yields down. it did hold basically unchanged. on one settlement below 2.17. yesterday, it traded close to 76 basis points. this chart starts in april of 2011. to give you an idea the last time we are in these zones, now, we are at 70 base points. now, let's look at the euro zones for the same time period. that is minus 25 basis points. there is a difference of almost one full point. many talking about that. the last chart is a dollar index. it is hovering at levels that we haven't seen since basically mid-april, right now comping to july. it looks like it is rallying.
9:48 am
we will probably move through that level. jim cramer, back to you. >> excellent, rick. thank you so much. fitbit shares are down today despite the big beat. they were up huge after hours joining us the cofounder of ceo, james parr. good to see you again. >> good to see you, jim. >> i'm not going to mince words. this was an amazing quarter by all means. everything guided up. do you think that gross margin is declining from 51 to 47.2. it makes sense to sell this stock giving the guide up that you gave. >> it's important to note on the gross margin side it was well within guidance. there were three contributing factors to the gross margin decline. one was fx which a lot of other companies have experienced and
9:49 am
another increasing capacity for best selling product and a shift to the higher selling product and both continued to our big beats on revenue. >> i'm going to stick with the negatives to start. i feel it was i agreata great quarter. people are saying you are spending too much to get new sales. there was a very big increase in hark keting. you stuck by it. you liked the espn deal and the kellogg deal and amazing race. are you spending too much money to get new product bought overseas where it sounds like you have to die lot of missionary work. >> you have to look at our op ex spending whole. we increased it by 3.3 x to drive revenues by 3.5 x. i think we are fairly efficient on op ex spending. in terms of sales and marketing, it is not only resulting in short-term benefits but we are laying the foundation for solid
9:50 am
future growths particularly in international markets. >> inventory up. you said that was very good. the third quarter doesn't have mother's day and father's day. they were huge for you. doesn't have new years resolution and holidays. could we be concerned that the inventory has gotten too high and you are finally able to meet all the demand the first time in your company's history you can do that? >> historically the company has been production constrained. people shouldn't be concerned about the inventory levels. our channel partners are comfortable. they don't want to see our products out of stock. >> now, let's talk to some things i think were underestimated and not talked about enough by the analysts. you made a deal with facebook. i think the problem with fitbit for my family there is not enough competition. they are doing it individually. will this facebook deal make it so people will be competing with other friends on facebook, thereby providing the next leg
9:51 am
up for fitbit. >> we want to make the social experience much more compelling so we integrated facebook friend fighting. we want to increase the density of our social graphic as one of the largest fitness social network in the world and that results in much greater engagement for users. >> do we have to worry about show-me? there are some reports away from what was on the conference call about market share loss on the low end. i regard you as a shost wearoftware and ecosystem company. apple watch, they do another competition. are you in the sweet spot where you don't have to worry about the high price or the low price. >> the mission for the company is pretty broad, about using technology to help people get healthier and more active. that's a very distinctive mission. we are going to do that by giving data guidance and inspiration through our social platform. >> last question when you say
9:52 am
stay tuned to analysts when you tell them you have got to have faith in our r&d spending which we are trim when you say we are not going to release a product until it is ready, the analysts that try to model your company's earnings are sometimetymied. are you willing to say you won't give the analysts what they want in terms of new product brand 1234. >> absolutely. we are not going to give guidance on new product introductions or releasing a product before it is ready. we think about your o consumers first. >> james congratulations on a great quarter. it is seller. i want people to understand why some people are selling. good to see you, sir. thank you very much. >> great, thanks. when we come back we will continue trading with jim. squawk continues in a moment. but you're armed with a roomy new jansport backpack,
9:53 am
a powerful new dell 2-in-1 laptop and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.
9:54 am
while every business is unique everyone is looking for ways to cut expenses. and that's where pg&e's online business energy checkup tool can really help. you can use it to track your actual energy use. find rebates that make equipment upgrades more affordable. even develop a customized energy plan for your company. think of it as a way to take more control over your operating costs.
9:55 am
and yet another energy saving opportunity from pg&e. find new ways to save energy and money with pg&e's business energy check-up. mornings. wonderful, crazy mornings. we figure you probably don't have time to wait on hold. that's why at xfinity we're hard at work building new apps like this one that lets you choose a time for us to call you. so instead of waiting on hold, we'll call you when things are just as wonderful... [phone rings] but a little less crazy. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. time for cramer and stock trading a controversy on herbalife
9:56 am
quarter. strong. business as usual when you are under attack by an activist is kind of strange. you know what? they are still doing that kind of points measurement that i never care about. i care about earnings per share. it was a quarter that was like the old days a bit with asia doing well. i no i know a lot of people always concerned about how are they doing in china in terms of the way they distribute the product. the stock is up because it was a better than expected quarter. >> mr. ackman has moved on. bigger fish to fry. herbalife is one of those stories where you believe in the system or you don't. do you believe in that kind of direct selling model? it has been very bad for the other companies. herbalife had a good china story. >> clorox.
9:57 am
>> which is just on a tear. it is representative of the sweet spot people like. brent saunders am i going to ask him what he is going to buy, of course i am. will he tell me? of course he won't. >> what a lineup. >> that's why i got up. every one of these guys i am sitting there and studying and studying. >> one more day, as we get through friday tomorrow. we'll see you tonight, "mad money," at 6:00 p.m. when he with come back the ceo of planet fitness as it opens. we're back in just a moment.
9:58 am
it took joel silverman years to become a master dog trainer. but only a few commands to master depositing checks at chase atms. technology designed for you. so you can easily master the way you bank. in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day. can a business have a mind? a subconscious. a knack for predicting the future.
9:59 am
reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive? hello. i am a fully automated investment advisory service. i can help you choose investments. monitor them. and rebalance your portfolio. i can do a lot of what humans can. except have a real conversation. if you'd like that, you can always speak to someone at schwab. they aren't algorithms. try not to hold it against them. say hello at
10:00 am
good thursday morning. welcome back to squawk in the street. i'm carl quintanilla with simon hobbs and david faber at the new york stock exchange. the down down almost 100 points. disney by far the worst performing, fox, 10%, tesla down as well. watching that closely, oil, remains below 45. risks are still to the down side. planet fitness just opened down
10:01 am
about 7%. we're going to have the ceo later this morning. this is what is ahead for the next 60 minutes on "squawk on the street." >> tesla lowering guidance for this year. that is sending the stock down sharply. find out what you are doing. republican presidential hopefuls facing off tonight for the first time. we'll get a preview of what to expect. keurig green mountain announcing weak sales. what the ceo has to say about the company's weak quarter. tesla's losses nearly tripled in financial terms in the second quarter. it has hit a speed bump. it said it wouldn't deliver or sell as many cars as people had expected. ceo, elon musk addressed how the company needs to raids more cash to offset increasing costs. >> we do think it is going to be quite a challenging production rap on the "x."
10:02 am
if we are faced with a choice of deliver -- we only want to deliver great cars. we don't want to drive to a number that's greater to deliver a pipe load of vehicles. >> he says the new car will blow your socks off. let's bring in ivan fineseccer a ceo at tigres financial. the company sets high expectations experiencing manufacturering issues and cuts guidance. >> you have to look at tesla from the perspective it is a an emerging growth company with an emerging product. we love the car. we love the ceo. however, you are going to have manufacturing issues. i think you have to have all the suppliers all lined up to meet the production goals.
10:03 am
is it somewhat driven by the suppliers and production capacity or demand? the new model "x" coming out is an incredible car. they have taken over 15,000 deposits. it was supposed to come out in the first quarter. now, it is not coming out until the last quarter. they have a great product. from a standpoint as an investor, it is hard to play the stock like this because of the valuation that can exceed expectations. if they aren't 100% the stock can drop the way it is today. >> apparently the second row seat is a sculptural work of art but hard to get right. >> if you look historically at emerging growth companies, that have these type of products they tend to do this. they tend to be very volatile. any positive news can send the stock up 10%, 20%. any negative news can send the stock down, 10%, 20%.
10:04 am
investors have to understand that. >> we have had a great run from $342 1/2 years ago. if you look at where it has traded, you have the volatility you but you aren't pakmaking the kind of numbers we have in the past. do people double down or go elsewhere? >> it is hard to buy the stock at the current levels. i think you want to see all the processes line up. to meet demand hopefully, the demand remains strong. >> jim's point was that the bears will focus on the sales forecast and the bulls will make their play when they get refinancing and capital. cash is also the story here today. >> they have raised a lot and gone through a lot of cash. they also have created a
10:05 am
tremendous amount of brand equity. you have a stock that's very highly val crude. >> do you own the stock? >> no. would it be the best idea you have in your space? >> we have a strong buy on gm a buy on ford and a neutral on tesla. >> prius was down 15. can we get past the argument that tesla is immune to low oil prices? >> tesla is not an electric car. tesla is a high-performance luxury car that happens to be electric. people aren't buying it because it is an electric car and fuel saving. they are buying it for the look the performance, the feature, the capability the cache, the uniqueness. >> bf-150 is arguably now a play thing for the rich. why is that not in competition with something like a tesla? >> they are coming out with a very high end f-150.
10:06 am
ford reported great demand for the f-150. a good indication that the economy, housing and construction, is improving. >> ivan feinseth from tigris. the top gop hopefuls are going to be in cleveland. what can we expect? john harwood will tell us? good morning. >> reporter: good morning, david. we have two debates. seven lagging candidates will participate in the undercard, a one-hour debate. the ten candidates leading in the national polls or doing the best in the national polls are going to debate for two hours at 9:00 on fox. everybody has been watching to see, is this the moment when donald trump starts to collapse and the real candidate, scott walker jeb bush, marco rubio, john kasich and others start to rise up? i talked to the speak easy
10:07 am
interview with pat buchanon who has won twice and won the primary. he says trump has talent. >> i look out there and see the issues border security mass immigration, unfair trade deals. they are my issues. they have sort of come to fruition and i'll be darned a fellow named trump has got them. >> are you impressed by trump's skills? >> he has shown a tremendous amount of political athletic skills. i think unless there is a real explosion or a blow-up, he is certainly in the final four. i would not be surprised to see him in the final two. i made the final two myself. i didn't start off with anything approaching what he has now. there is no question about it. he has natural gifts and, as you mentioned, he has been doing this for years and years on the a [ sis apprentice and tv. do you know anybody else that could have done that in two
10:08 am
weeks without the show being canceled p.t. barnum and huey long, no man a king everyone wears a crown. i'm delighted he is in the campaign. i'm delighted. >> reporter: tonight, republican voters are going to get a chance to measure how far a leap is it from reality television to the white house? >> we can't wait for prime time. our john harwood joining us today from cleveland. the pressure is on at keurig the stock tumbling big-time. our own sarah eisen talks to the company's ceo. the same subscribers worry that plague disney weighing on the other media names. dow is down 88 and is trying to avoid its first six-section losing streak since october. we are back in a moment.
10:09 am
♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. those who have served our nation. have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.
10:10 am
10:11 am
markets are down. slightly off the low. dow down 70 points. trying to avoid the first six-day losing streak. mark hogan and joseph livonia are joining us. good morning, guys. good to see you. >> good morning carl. >> good morning. >> it has been a week of big market cap losses and a lot of individual names ha had been stalwarts, relatively unthreatened, specially when it came to big technical levels. disney is the chief example of
10:12 am
that. is that a warning sign for the market at-large? >> i don't think it is. it is a great question. when you look at a company like disney and what's happening with this media meltdown. i think it is interesting to see the entirety of media, whether you are lionsgate or cable or content, everything is getting thrown at you. in this particular juncture it feels like we are in the same phase. we are probably at an opportunity phase here as well. when you get in a situation where media is melting down had been leadership, you have to look at strongest names tango after it. time warner comcast, charter. what's happening here you are questioning medias ability to be important next year and the year afterwards. i think that's the wrong play to make. >> it sort of collides with isms looking good. some upward divisions to gdp.
10:13 am
how is it tracking in your view? >> there is still residual seasonality. you still have the weak first quarter and the rest of the year is better. q-2 looks like it will be roux he advised from q-3 to maybe 3, 3.1. if we look at that pattern, history says the payback should be in q-3. i am at 3% for this quarter. if the q-2 is revised up to 3, maybe q-3 is 3.5, even 4. it is possible. however, carl the year to year trend in the data will still be in the 2s. it is always the payback from the week of q-1. we have yet to celebrate a sustainable trend. >> tomorrow is the first of the two employments we have before the fed decides what it will do on interest rates and will it raise in september? >> the market is 50/50 on them
10:14 am
hiking. the local community is more like 75%, 80% they are hiking. if the numbers are strong the market will price higher probability the fed goes. what if august is weak. the fed should ignore any weak number, because the trend has generally been good. jobless claims are low. in the market doesn't thing the fed is going in september, can the fed convince the market it is going because we are in this bizarreo world where the fed doesn't want to convince them of anything. i think they will still go. >> what do clients ask you in terms of equity moves with the fed. how worried are they about it? what are we embarking on here? >> simon, that's a great question. part of that question involves about 30% of our clients that have never seen the fed move or tighten in their entire lifetime. that adds a certain amount of
10:15 am
trepidation. a signal from the fed that the economy is strong enough to move 25 30 basis points is something that's very good. not having the fed move would send the signal that things are worse. we see around the corner in this economy we don't think it is strong enough to get off the zero balance. our commentary is think about things that are doing better. we are surely going to be there. i think it moves in september. it is the job of economic data to dissuade not persuade them from that move. >> we have been searching for signs of inflation in labor. we have copper gold oil. you name it joe. all the doctorates in economics. >> the commodity story is very soft. that will all else equal, will weigh encore inflation. it is really a race between the commodity side and the services side which you would think would accelerate in regards to a tightening labor market.
10:16 am
housing is the biggest cost for most people. we are assuming some reversal in medical care costs, which have been extraordinary low. as obamacare comes on line with he think that will push the medical care higher. in the short-term inflation is not going up very much. for the fed, we have to be confident it is going to go up in the intermediate term. >> as you said yesterday, to 2%. are you convinced that's going to happen? >> no. >> can they see that far? >> do they have a clue what's going to happen to core inflation? >> no, they don't. the models don't work. this he know as we know that zero is not the right number in an environment where it is 5.3 and likely going below 5 by year-end. >> when oil had its troubles earlier in the year we all launched into the conversation it was going to help the consumer waited for retail sales to bounce didn't happen. now that we are back at 44, i'm not hearing that conversation
10:17 am
again. >> it's interesting. the first derivatives on saving at the pump was the restaurants. if you look at the charts of any restaurants, it has been a moon shot this year. that's been the right call. what's not been the call the teen apparel hasn't certainly played out in the department stores. the larger ticket item has worked out too. think about apple and how much they are selling in iphone 6. better in housing, auto the restaurants. everything at the mall is worth something. >> tomorrow is a big day. art, joe, good to see you guys. thank you. >> thank you. >> in the meantime planet fitness makes its debut as a public company. the stock was priced at $16. it is currently trading at $14.69. it is tough to debut on this market at the moment. two big ipos obviously recently
10:18 am
seeing significant losses. the ceo of planet fitness will join us live after this break.
10:19 am
10:20 am
10:21 am
planet fitness making its debut. the stock did open lower. it is one of the fastest growing franchise dwim franchise gyms in the country. crist ceo joins us here. >> thanks for having me. >> there does seem to be some
10:22 am
skepticism at-large regarding fitness and public markets. how do you get around that? >> our customer with he cater to 80% of the population that does not belong to a health club. moef of the others are catering to the 20%. it is affordable. $10 per month. >> you handed out bagles today. sometimes you guys have pizza days. you refer to your typical gym rat as a lunk. how does that model pay off in the long-term? explain that. we cater to the average person that comes in. working out is hard. it is difficult. a lot of people don't have the time to make it in. we want to make it easy and simple and fun. pizza night first monday of every monday. we feel you deserve to cheat once in a while. everything in moderation. it builds great comradery among the staff and members. >> does that mean membership turn is higher? >> i focus on net members per store. we are averaging 6600 members
10:23 am
per location. we opened our first two in canada. >> 6600 people paying $10 a month. i was having this conversation with my trainer. how much in a major city does it cost to set up a gym? >> it is a fixed cost. >> you get a discount on the equipment because you are so big. >> we do a lot of volume. we do a lot of volume in the cities. the only moving factor is the rent. we have many stores that have over 10,000 members. >> 10,000 members. >> how much roughly would it cost me to set up a gym? >> about $1.9 million to set up a store including the equipment. >> what portion of gyms fail not in your business but generally? i remember talking to another senior member of another high-profile gym. he was saying something like 70%-80 percent of gyms fail. i think one of the biggest things with the gym industry. we are in a different world,
10:24 am
catering to the 80%. lack of cap ex is one of the biggest. reinvesting, keeping it fresh and adding equipment. you would go to a 20-year-old store sometimes and the equipment was 20-year-olds. we are cautious to reinvest in our store. >> it drives to the long-term future of a franchise business. if so many franchise yes are likely to go out of business. >> the franchisees are very bullish. 87% of new units opened last year were by existing franchisees. >> if i'm a franchisee, how many can i have? >> we have some that are over 50 locations. these are big companies within themselves. >> sounds like mcdonald's. >> absolutely. >> at the same time you have these gyms like he can requestequinox.
10:25 am
they are into subsidizing the property. can they undercut you in the market? >> they are still a very different model. we really like strip centers. we like to be next to a grocery store, some place convenient that you are going frequently. many landlords like our traffic. we are busy monday through wednesday. we have grocery stores there in the weekend. >> is it a fad, right? do you ride some sort of wave of popularity? are you prepared to change your image as tastes involve. >> we have been around for over 20 years. it was sent we came up with in the board room one afternoon. we have what is most important, the card yoer,io, ai lot of circuit training equipment. it continues to grow. we have added our members per store with 5800 and now 6600. >> how many are women? >> over 50%. >> 55%.
10:26 am
>> which is extraordinary to the industry. you are the no-judgment gym. >> we are comfortable. >> you want to explain the "e" in judgment. it was a mistake. we thought, hey, we are judgment free. we are going to go with it. >> i love it. >> thank you. >> thanks for the tie purple. >> chris rondeau joining us michael kors making some gains today after topping earnings expectation. its widespread pain is causing the luxury retail stock to own now. more when we come back. ♪ ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop
10:27 am
and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great. can it make a dentist appointment when my teeth are ready? ♪ ♪ can it tell the doctor how long you have to wear this thing? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪ the answer is yes, it can. so, the question your customers are really asking is can your business deliver?
10:28 am
10:29 am
>> good morning. i'm sue her rir ra. your cnbc update. in malaysia secretary of state, john kerry, expressing his condolences to the family of the victims of missing malaysia flight 370. secretary kerry says he hopes that the flight's wing fragment found on reunion island might help narrow the search for the missing aircraft. >> the tennessee movie shooter has been identified as 29-year-old vincente david montono, who police say has a history of mental illness, armed with a hatchet and an air soft pellet gun before he attacked three before being shot and killed by police fire fighting crews are beginning to gain some ground on a massive northern california
10:30 am
blaze that has destroyed numerous buildings and driven thousands from their homes. the wild fire has scorched more than 100,000 square miles and is now 30% contained. japan marking the 70th anniversary of the atomic bombing of hiroshima. caroline kennedy among the more than 50,000 people gathering to pray before a monument dedicated to the nearly 300,000 victims at the city's memorial park. >> that is your cnbc news update at this hour. back to "squawk on the street" can we get some oil inven tris torres at the nymex? >> we are talking about natural gas, the inventory storage report. thursday morning highlight of my day. we do have an injection. i'm told it is in the 30s. we have had trouble with our boards right now. it is 32 is the confirmation of
10:31 am
the number. let's look at prices. 2.78. we are negative on the day. what traders are looking at here is the total stocks. we have mentioned this a number of times. 25% over where we were last year. this has been a very tough trade for you. look at the charts. the week the month, the three-month, this trade has pretty much been flat. on the year we are down about 5%. traders telling me if you are looking to trade in the short-term, you are looking at the 7-10 day forecast at least here on the east coast. it is expected to be warm but normal summer temperatures. this report sending us down a little bit, 2.79 at this point. back to you. >> thank you very much jackie. retail earnings in the spot lying, the latest is michael kors beating higher demand for accessories and footwear. let's not forget this is a stock that halved in value so far this year. joan payton is a research analyst at barclays. what do people like here?
10:32 am
>> there has been a lot of concern in the marketplace for the accessory space overall. a lot of concern this is a structural change. we have seen a lot of the hand bags down significantly. what we are hearing from kors that their north american accessory business is still trending in the high digits. as well as things like tourism, which are probably more near-term and short-term in terms of how they disrupt the marketplace. kors did outperform on the bottom line slightly in terms of the retail comp trends. they are guiding to something even slidely ghtly better. the north american business in terms of wholesale continuing to decline for the first time. north american retail the comps were down high single digits and mid single when you take that into account.
10:33 am
coming out of today, the trend sounded better than what was being feared. >> does it change the overall story for you, joan? >> not from my perspective, not yet. this is still number one market share player in a very tough category at this stage, specially on the wholesale side. department store trends have been much softer even in handbags. kors is the one with the highest wholesale exposure compared to the peer group. 50% of their north american business. most hand brand bags do not extend beyond 200 million, 300 million in wholesale volumes. we think some of what they did was get incrementally more propotionle than the past. we saw gross margins down about 100 bips more than that on the retail and wholesale side. they are beginning to get more aggressive on price and that is helping to recapture more market share. >> at what point does it become a buy? >> i think with this business
10:34 am
the one concern from our perspective is the size of the wholesale business. they are in more than 2500 door doorings in north america, full price. that is a large distribution base. with something like that you could begin to see more channel shifts in terms of the mid-tier consumer going more into the department sales. >> you are describing a great franchise, a really deep-set business there. surely it could equally do that or is it a lost game. can we turn that around the situation is a liability in your view. >> it is difficult to continue growing specially at the pace they have been going on a go-forward basis. when this is becoming a more fragmented category. they are stepping up and getting more aggressive and competitive and beginning to take market share such as kate spade. we think that gets more difficult. in the case of kors they have
10:35 am
had peek productivity level. still, extremely high. >> just looking through your coverage, university, coach, macy's, what do you like? what is the best bet at the moment? >> in the accessories space or as it relates to today, we do like coach. with he do like kate spade. they have had similar pullbacks to michael kors here to date. with all the concerns we think both have opportunities in terms of productivity and for kate spade on the margin side. while kors is at much higher margins, kate spade is starting from a single digit margin level. we think they will continue to see not only market share gains but margin expansion opportunity from here. >> good to see you, joan. joan payson from barkclays. keurig green mountain is down today.
10:36 am
our own sarah eisen follows this company closely. even on vacation she is taking a moment to show us some insight. >> the quarter was a mess no matter how you look at it. a lot of people were disappointed with the forecast. they lowered their sales guidance for the third time after they reported a 26% drop in brewer and accessory sales. they expect a drop at sales for the year. next quarter, sales will drop in the low teens. wall street was looking for a gain next quarter. for many on the streets seeing this company and know the scope of the problem, they were floored by some of the down grades. the company has three big problems right now, number one, the launch of the 2.0 brewer last fall. it has been a complete disaster. sales your underwhelming. consumers are upset they can't use the old pods. they were forced to admit that returns were higher than norm many. the pod sales were down this quarter. this is 80% of the total
10:37 am
business and the k-cups are facing big competition from starbucks and kraft and other companies. there is already pessimism surrounding the cold machine to make sodas and other cold drinks in partnership with coke set to launch this fall. already, a surprise about the high price point and slow rollout. put it all together a recipe for a bad quarter, one which executives admitted they were not proud of. investors were surprised at the magnitude of how low those forecasts were getting from the company. >> sara does this change coke's pot posture in terms of the ownership? >> coke has a 16% stake. they are down on their investment by almost half a billion dollars. the only bull case is that coke will swoop in and buy while the company is cheap. i have talked to the ceo and a number of executives they are
10:38 am
in no rush to be buying out some major company. they like this idea of smaller investments. they did it in monster. they like getting in on these company that is were supposed to be growth companies. as you know, i talked to the fcf of coca-cola and i asked her about the keurig investment, which is down. she said in the long term we are optimistic about this new cold machine. she said once it hits market they will still be very excited. they are keeping their position in it for the long-run in tefrms of terms of the cold machine. i think they want to see how that does. this company is facing some excentential problems. >> mondelez is one of the companies that you follow. they are doing everything right
10:39 am
at mondelez. the idea would be to focus on a transition down the road. what is your take? >> this is a stock that is up already nearly 30% this year. i talked to the ceo, who has been pleased and very aggressive when it comes to cutting cost. many say she has been best in class at doing that. we already started to see the margin improvement. as far as mna, mondelez was always an attractive target. it has strong brands like oreos but it is very big and it is already up this year. as we both talked about, the math would be hard. a $77 billion market cap company. the other factor is that 3g and buffet are already in one of the early stages of one of the biggest typups biggest tie-ups combining heinz
10:40 am
and kraft. they have to pull out that combination. however, as you know david, the overarching theme in this industry is that consumers are eating differently and spending differently. that's led to a wave of consolidation. general mills bought annies tyson food bought hillshire. this would be a very very big one and a very difficult one to pull off. >> very difficult. we will have more on this big acquisition position. thank you for taking time out from vacation. >> thanks guys. see you next week. >> when it comes to movers, i'm frankly shocked as to what's going on in the media sector. losses that have to be closing in on $50 billion or $60 billion in market value. it started yesterday when we heard from disney the day
10:41 am
before, after the bell, when it reported earnings. the company at least gave some sense that there was slight subscriber loss at espn. it is slight. perhaps as little as 1% to 2% subscriber erosion. that was the spark that set off a bonfire that has he have advice serrated a lot of market value. take a look at viacom. down almost 17%. this morning, the company reported earnings. it also reported, of course, advertising that quarter to quarter is not growing at all. viacom in many ways was the first into if you will or the first dealing with the significant changes that are taking place in the distribution of content in our media world, if you will. given the demographic of much of their programming at the younger level, this he were battling in terms of losing people to netflix long ago, the question becomes, whatest currency your
10:42 am
networks have to make sure they stay within the bundle? what is the proposition there for advertisers? they have been dealing with that and trying to come up with with different ways to deal with it. first in perhaps first out. it is just ugly. as you look at netflix appreciation of value. that's simply over the last year. vie o viacom not alone. new management running that place. james murdoch, the son of rupert murdoch, now, the ceo. he continues as chairman as does his other son, lochlin who is executive chairman. fox, also perhaps, not giving confident when it comes to rea
10:43 am
reafirmation. tell us that 16 is all right. they said we never do it quarter to quarter. we give guidance at different times. right now, a lot of investors seem to be saying enough i'm out. maybe it is panic. it is something to behold the losses that have taken place over the last two days suddenly, something we have talked about for years namely the erosion of the bundle seems to be having an impact in the stock market far beyond what it seems to me. many that follow this industry that the fundamentals we have seen would dictate. it doesn't mean it is not coming. >> it cobuld be the pivot point. >> wait until one of the big guys says it is happening and he said it. >> cramer said he thought on yesterday's show he thought disney was headed for a multi-day selloff. he has been absolutely right.
10:44 am
when we come back we'll hear from apple on their music push and hear from the share holders. dow is down 67. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.
10:45 am
10:46 am
is it finally time to get bullish on mcdonald's? that's what goldman sachs says and they have a very specific way to do it. more "squawk on the street" coming up next.
10:47 am
brazil is an interesting place. >> really brazil? >> economy and currency has gone in half. from a hard asset perspective, currency falls by half. cap rates up a couple hundred basis points. you are buying the same asset maybe down 60%, 65% in dollar terms. the natural first port of call would be the united states because of the liquidity and scale of the market. what you saw with the waldorf
10:48 am
and other assets i would expect that to continue. >> we say today, not a ton of building going on leverage in the system is reasonable. we still think this economic cycle has a bit of a ways to go. that's why we are optimistic. >> that was my interview with black stone's jonathan gray the largest single investor in real estate probably on the planet. visit delivering all the content from that conference online. >> in the meantime let's hit the santelli exchange this morning. over to the cme and mr. santelli. >> thanks, simon. i would like to welcome my guest, andy brenner. andy, we always have fun. thank you for taking the time. i'm going to hit you with an unusual question big guy. how many hours a night do you sleep? how much sleep do you get? >> probably about five or six, something like that, not more. >> let's assume you are going to live to age 80 quick calculation, you are going to
10:49 am
sleep away around 21 or 22 years of your life? does that mean that you give up sleeping? >> not at all. >> the discussion i want to have is about the dollar. a lot of stories written with very smart people. david rosenberg, we all love david rosenberg, writes some wonderful pieces does great research. dollar has moved up like the equipment of tightening 200 basis points. it is like sleeping and how much time it uses upment they have to normalize rates. is that a circular frame of reference to consider as a reason not to normalize. >> absolutely rick. what you have here is even today's claims number. that was the first time in 43 years that the claims have been under 300 for as long as they have been. when you have the fed that has no choice but to tighten. as far as the dollear argument,
10:50 am
the emerging market and commodities. they are down i think it's happened and i think we're in a position of buy the rumor, sell the fact or in this case sell the rumor and buy the fact. i think things will improve once the fed starts to normalize. you know, might be an initial downtick i don't think equities are priced in the fed. i think there's allot of surprises how the market reacts once the fed move is finally done. >> you know many you and i probably agree, that the normalization process, of course going to potentially take something away from equities, create lots of volatility in the fixed income markets, the market's getting back mojo versus having a thumb on the scale, is going to have issues. we all agree with that. >> absolutely. >> what if after the fed starts to normalize, we get volatility and stocks actually firm up and
10:51 am
rates are behaved? i don't know how it's going to turn out but i know one thing, we need to know in a more honest market fashion how our investments will perform without all of these policy and fed implementations of certain rate structures. how do you think it will play out in last 20 seconds? >> rick u think the fed's going to raise in september, 25 basis points. i think the turnaround see how the markets look and if the markets don't do anything bad, they're going to raise in december. that will probably be it for a while. i wouldn't be surprised if bonds go down first and then actually come up and the yield curve flattens more. i'm not that scared about a fed raising rates and i think a lot of the damage through emerging markets, commodities, and elsewhere has already happened. >> already done. absolutely. nothing to fear but fear itself! let's get moving fed. andy, thank you very much for taking the time. simon hobbs, back to you. >> maybe they will.
10:52 am
the hotel industry's biggest trade association pushing back against the merger between expedia and orbitz. the latest details when "squawk on the street" comes right back.
10:53 am
10:54 am
10:55 am
the hotel industry's going public on lobbying efforts to look expedia's $1.3 billion acquisition of orbitz. the combination of both set of brands would give expedia control of 75% of the country's online travel agency business. according to the american hotel and lodging association. it warns that expedia's brands already charge hotel owners 11% more in commissions to sell their rooms and that orbitz brands could hike their rates to close that gap once the deal is closed. the ahla also claims the acquisition will leave 95% of the country's online travel industry in the hands of the expedia and priceline dueopolyduopoly. one of the lodging brands may be fighting to back to change the structure of the industry. marriott's ceo offer to-inging to make his hotel inventory set up by the smaller independent rival,
10:56 am
tripadvisor. the move is about both paying lower commissions and having fewer restrictions on what prices marriott can offer elsewhere. >> we want to make sure we've got a partner that allows us to control our inventory, yield that inventory, hope gli get customer data coming through the channels. tripadvisor, a deal attractive to us on all of those measures. >> a spokesman for expedia's ceo declining all comments today. but in the past khosrowshahi told the program, it operates if a competitive environment and expects regulators to allow his acquisition of orbitz to go through. orbitz announced earnings today. the gross bookings are in decline. the bigger question, could orbitz survive on its own without that acquisition? straight ahead, of course we have "squawk alley."
10:57 am
henry blodget weighs in on media earning, fitbit results and tesla's big slide today, all after this break. ♪ approaching medicare eligibility? you may think you can put off checking out your medicare options until you're sixty-five but now is a good time to get the ball rolling. keep in mind medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans they could help pay some of what medicare doesn't, saving you in out-of-pocket medical costs.
10:58 am
you've learned that taking informed steps along the way really makes a difference later. that's what it means to go long™. call now and request this free [decision guide]. it's full of information on medicare and the range of aarp medicare supplement plans to choose from based on your needs and budget. all plans like these let you choose any doctor or hospital that accepts medicare patients and there are no network restrictions. unitedhealthcare insurance company has over thirty years experience and the commitment to roll along with you, keeping you on course. so call now and discover how an aarp medicare supplement plan could go long™ for you. these are the only medicare supplement insurance plans endorsed by aarp an organization serving the needs of people 50 and over for generations. plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. remember, medicare doesn't cover everything.
10:59 am
the rest is up to you. call now, request your free [decision guide] and start gathering the information you need to help you keep rolling with confidence. go long™. ♪ good thursday morning. 8:00 a.m. at fitbit
11:00 am
headquarters in california 11:00 am on wall street and "squawk alley" is live. ♪ ♪ throw away your television time make this clean decision ♪ ♪ master weights for its collision now♪ >> jon fortt, kayla toushashy out today. kelly evans working double shift. nice to have you back again. market day, so much to get to. apple, the company announcing that apple music has more than 11 million members during the free


info Stream Only

Uploaded by TV Archive on