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tv   Squawk on the Street  CNBC  May 16, 2016 9:00am-11:01am EDT

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one last quick look at the futures after three not great weeks. who knows today. there's green, but we got to trade until 4:00 once 9:30 starts. anyway, it's 9:00. join us tomorrow. but "squawk on the street" starts right now. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. stocks trying to shake off friday's selloff and the first three-week loss since february. we've got some pharma m&a this morning, buffett's buying some apple. we'll get you up to date. in europe german markets are closed for a holiday otherwise prices relatively steadily. oil's creeping up as goldman ups its price target to 50. road map begins with lots of
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apple news today. company getting a big investment from berkshire hathaway, the ride sharing service he just invested in there could be looking for a u.s. ipo. >> shares of yahoo up on quicken loans founder part of a consortium bidding for the company. warren buffett says he'll back it. major m&a deals, pfizer making a $4.5 million purchase. but first, berkshire hathaway has revealed a new $9.8 million stake in apple. meanwhile, apple ceo tim cook visiting china in an effort to reinvigorate sales in that country. he's expected to meet with chinese officials and is already met with the president of didi just days after apple announced that billion dollar investment in the ride hailing start-up. met with some other start-up creators as well, posted waebo which has gone viral already. >> i think the story is the app
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store. $7 billion in business that regular chinese people have done on the app store. between that billion and billion last year and i think what that's about is to say you may think that we just come and make parts here, but you have many people who have made millions off of the store. and we are better partners than you think. and i understand that after this. maybe he's headed to india, another country that's very strong. is it a charm offensive? how about it's a recognition that apple's a better citizen than you realize. because there's so many people involved in trying to make the app store -- make profits for the app store. they don't stand out. it's not a company. but i think when you're in china you want to be able to say a lot of people have done well and it matters to the government. >> does it matter that mr. buffett now is an owner of apple shares?
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interestingly he may have bought some of the icahn that were being disposed. added a great deal to his overall portfolio, it's a nice little endorsement. >> you know, it's funny, you always know when icahn buys something suddenly there's something so hated like apple, it wasn't buffett, it wasn't -- these two other guys. buffett had nothing to do with it. everything else buffett had something to do with, coca-cola, not this one. no, no, huh-uh. these two are the guys. >> you don't believe becky quick when she says -- >> no, it's true. but stealing buffett's money for heaven sake. wasn't like buffett said you two stooges go buy whatever you want. i don't want to know about it. that's not -- it's not that decentralized. but apple's so hated now it's like, you know, it's against a core short that warren has.
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>> how much -- here's a question. how much cover does it give managers to start buying some here? >> that's a really good question. because you know what, i was looking at coca-cola over the weekend and that stock, it had a good quarter, but it's probably one of the better performing stocks in the dow because i think buffett gives you cover. he can't give a cover for a bank because bank stocks need 72,428 rate hikes within the next two weeks because they can't get out of their way, but coca-cola has the halo. american express had a decent quarter, stock is back. but i do think when he bought -- when buffett's minions, good movie -- >> for a homer. >> yeah. people say, you know what, maybe it's cheaper than i think. and i already -- someone came out with a negative note about sky works saying the apple i7 is much weaker, to determine it's weaker than expected in the month of may is rather amazing. because what that says is the apple 9 is a total failure and
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the car doesn't work. again, the hatred for apple now is starting -- we still haven't had the downgrades. tony has to say apple not only is it done, it's rotten. bernstein analyst, amazon 1,000, apple to zero. we need to have these people come out and say if you're looking for apple to bottom, people have to say this is the worst thing that's ever happened. cook doesn't know what he's doing. there is no 7. there's only zuel. >> superman 2? >> yeah. >> it was one. >> no, "ghost busters". >> oh, wait -- there's no data. there's no cook. there's only zool. >> you're thinking general -- >> thanks. i am not up -- >> established a guideline. it's actually going to have a shortfall. >> i'm thinking zod, zool, new
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"ghostbusters" coming out. >> is it disney? >> i don't know. >> captain america closing in on a billion dollars. >> these are the two most hated stocks i've ever seen, disney and apple. i was at my daughter's convention this weekend -- >> congratulations. >> thank you. >> to her. >> cook knows nothing, i said well he made $10 billion. but beside that he knows nothing. i said, i don't know, $10 billion. i mean, $10 billion. and the guy's reaction was like, yeah, but what's he done lately? wow, unless you're the chicago cubs, i guess you're a fool. >> they are doing well lately. >> no, that's wrong. everyone else is an idiot. >> let's see where we all stand when october rolls around. >> can we just admit that not everything is as horrible? you read through the papers, one year ago we were happy, now we're miserable. the level of negativity about life -- >> oh, here's -- >> about life. little existential here.
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>> see the graphic at the top of this page? it's a snail. >> i brought it too. >> this is -- >> i was trying to remember which one of the "sponge bob," what's the snail's name? gary. >> gary. >> yeah, look at gary. this is when -- you know, patrick bought apple for buffett. you think it was his guys, but it was patrick. >> patrick is known -- mr. crabs -- >> speaking of buffett, yahoo up in the market, quicken loans founder dan gilbert bidding for the company. and berkshire offered to be a potential partner in that bid. i'm an enormous admirer of dan and what he has accomplished at quicken loans. yahoo is not the type of thing i'd ever be an equity partner in, but if dan needed proper financing protections, we would be a possible financing help. >> which he will be from time to time. and typically he gets very good terms does mr. buffett.
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>> yes, he does. >> listen, as i've said many times, the auction for yahoo's core business continues. it now of course is being overseen by a board of directors that includes jeff smith from starboard, one-time activist. and it will likely conclude let's call it where are we middle of may right now? let's say a month from now we should have a very good sense. verizon is still thought to be the leading bidder if they want to own it, many people believe they will emerge victorious. but price is going to be very interesting here in what we get. >> pick up the paper and there's pfizer going for it. right? pfizer buys -- >> we'll talk about that in a minute, yeah. >> but i'm just saying when i hear all this chatter that someone may bid, someone may this or that -- >> by the way we're talking about an asset that may have a value of $5 billion, that would be a halfway decent price. who knows. >> i think the longer that you
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don't have the outright bid, the more of a recognition that, well, i don't know -- >> but it's a process, jim. >> yeah. >> it's a process being run and so everybody's going to abide by the more or less rules of that process. so it's not like a one-off negotiation. >> but, you know, you have a ceo there, right? >> yeah. >> the ceo is adamant about being in charge. >> yeah. >> right. >> she's in charge of running the business right now until it's sold. >> it's not like this jeff smith comes in there and says look at me, i am the captain. she's still the captain, right? >> mayer's boat, all over the place. >> had nothing to do with zod or zool. >> i'm just saying. >> right. >> i am the captain now. she is the captain. o captain, my captain, want to get philosophic. >> there we go.
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jim mentioned one, pfizer agrees to buy the maker of an experimental eczema gel. closing price on friday, the deal's valued at $5.2 billion, that's when you include debt. also gannett raises unsolicited offer to buy tribune to $15 a share. let's, jim, start with the pfizer deal. >> yeah. >> i haven't had a chance to speak to people who advised on the deal to help understand the logic for it because i have spoken to people who question the logic for it. who say very simply pfizer is an oncology company at this point. that's where they're making their big bet. and for them to go into this arena, one by the way their former merger partner allergan you might have thought would be very interested in, but not pfizer. they'll have to build out an entire sales force, potentially, they're paying a very significant price. and while the drug which hasn't hit the market yet but is expected to may be very beneficial in particular given
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eczema shows up in kids and there's a lot of injectables and moms and dads don't want to subject their kids to injecti s injections, fine, but they don't think it makes sense for their franchise. i don't have the answers from pfizer as to why but those are some of the questions. >> i agree with you. regeneron has a new drug in the market for this as well. i agree it's not synergistic but looks like pfizer has to do something. >> i know. but listen, maybe medivation some people have been speculating that's an oncology company, you could least make an understand why. by the way, cash they have plenty of it overseas, but the u.s. cash is precious. >> right. >> and to spend it on something like this -- >> and the premium is kind of absurd to me. do you think if they bought davita it would be anna cor cortcorta
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corta vida. >> do you write these down the night before -- >> if i would have had that one the night before i would have been able to do it. >> who's writing your material, jack bennie? >> no, i've got -- >> dennis miller sub referencing over here. >> i am using mory amsterdam -- >> dick van dike show. >> right. >> real quickly we can also hit tribune and gannett. we'll come back to some of this stuff later see how the stocks move. on gannett and tribune a big increase almost 100% premium at this point. there's not a path here. they can't replace the board. the company's chairman in many ways seems to have control of a lot of those board seats, but his largest investors they're hoping are going to say come on, 15 bucks for a company at this point we've come up, we're paying, you know, a significant premium over where the stock was. >> but you're betting against yourself at this point. >> paying a very fair price for fair value. even by the way i'm hearing if they were allowed due diligence on the gannett side they might
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be willing to go up if they can identify more synergy. but we'll see whether they're let in the tent at all or whether we get another rejection tomorrow. lawsuits from shareholders might follow if that's the case because they may feel like they've really been boxed out here. >> this is an asset that's only valuable to gannett. there's no one else. how can -- what would tribune be waiting for? how would they get to 15 on their own? how could they possibly get there? >> michael from tribune a couple weeks ago he talked about artificial intelligence, using data in far more sophisticated ways to help their advertisers. >> but you're saying they're negotiating against hethemselve? >> i think this is a windfall. i was worried the tribune -- that they would have to reorganize again. i thought they were going down the rabbit hole. suddenly they've got a double and the guy's still what artificial intelligence? i mean, what is he, watson? watson, come here, i don't need
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you. >> we will see what the response is. but again, it is a very significant premium -- >> the response, you can have it now, senator, i'll take it. >> i know. except the chairman of the company who's the largest shareholder doesn't seem to want it. >> well, that's great. >> but that was 12.25, this is 15. we'll see. >> this is a lot of money. if this guy says just say no defense to this, i mean, what does he want, 30? i mean, come on. this thing may not exist without gannett. thank you gannett. i'll take the money. >> when we come back we'll take a closer look at that goldman call on crude that's helping it to rally this morning. also ahead live interview with comcast chairman and ceo brian roberts on a week where the networks are going to start launching their upfronts. look at the market, dow, s&p back below 50-day moving average. we're back in a minute. there's no one road out there. no one surface... no one speed...
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crude is higher this morning. to november highs on growing oil disruptions in nigeria and now this call from goldman sachs, the firm upping its target to 50 saying the oil market has ended almost two years of oversupply. and now shifting into a deficit. goldman says the shift likely began this month driven by stronger demand and declining
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production. so they were at 45 for the second half. they go to 50. they lower their forecast next year as they see equilibrium once again in q1. >> yeah, i think the story you get to 50 a lot of oil comes out of the ground. there are only 20 counties in this whole darn country that are really where you can make money even at 50. 66% of the onshore rigs are now operating in 20 counties, not states, counties. this memorial deal that we got this morning, which is ranged by memorial. >> yeah. >> a lot of that is this is an amazing transformation. so much natural gas in the northeast which used to be short natural gas, marseilles no place to do it so they go down and buy a northern louisiana natural gas company, because there's economic activity down in northern louisiana where there's a lot of construction going on. and of course there's export. but the country has so much
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natural gas. and there is so much oil that drilling is just a loss so many different places right now. so, you know, memorial is not a great company but ranges dealing with guys who have a dollar production cost and $2 natural gas. and the northeast is flooded with natural gas. it's the exact opposite of what used to happen where memorial's natural gas would come up. williams piping by the way. >> we'll talk williams later. >> transgo. >> yeah. >> so anyway, there's too much oil and not a place to put it except for in goldman's call they're absolutely right because nigeria is going offline. horrible articles about venezuela this morning. still paying service companies
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b but. >> literally look like -- >> what kind of world is that? >> you've been talking about it being a failed state and that now is becoming the reality. >> largest independent oil reserves in the world and a government that's not as good as its people. that's for certain. >> when we come back we'll count down to the opening bell, look at the premarket one more time on a busy week. we're going to get a lot of retail earnings this week, some fed speak, fed minutes, existing home sales, a lot of housing data. we'll talk about the week ahead in a moment. this just got interesting. so why pause to take a pill? and why stop to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph,
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all right. welcome back. very cold monday morning here in the northeast. we're going to start with delta, place that will take you somewhere warm. >> i've got to tell you, david, these airlines have just been horrendous stocks. a lot of people look to the transports for leadership and they provided none, other than fed ex. the rails had a bounce, but that stock delta this morning talks about in a meeting reduced plan capacity to below 2% to second half of 2016. this is good news because the capacity expansions here have been as bad as the old days. that jetblue number was really the kiss of death in terms of expansion. this could be what is needed in terms of being able to make it sell capacity. price war, and southwest has been winning the price war, so just be careful if you're short these, which everybody i know is in the hedge fund world. >> right. >> this is the first good news we've had, capacity cut. not good for boeing but boeing has big worldwide orders.
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boeing's quarter was not bad, but as long as the airlines are under pressure you can always not own boeing and i think this is good for boeing too. >> all right. one more. >> now, this is so important. bernstein comes out today and says tjx and ross stores, i know people want to sell retail, they reported 17th and 19th respectively, but these are the companies that benefit when nordstrom and jc penney and macy's have too much inventory. they come in and buy the stuff low and they mark it up. so the idea these are somehow in the same camp as the department stores is antithet kal. they are the winners from the department store, not the losers. >> they trade almost identically. >> and they really shouldn't because tjx has big international. ross is not all over the country yet. tjx, really incredibly well run, also has home goods which dovetails with the notion people want to invest in their home.
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i expect home depot and lowe's to have good quarters, spring planting season upon us, a good story to tell. lowe's hit by a canadian outfit, people don't like that purchase. but this is a week where retail is not like -- >> thankfully we're past a lot of the perilled companies stook. >> i didn't talk about amazon and private label. >> it is. big story today about of course their aggressive move into private label at amazon. all right. we got the opening bell a few minutes away. stay with us right here on "squawk on the street." this car?
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you're watching cnbc "squawk on the street" live from the financial capital of the world. we'll get the opening bell in just under two minutes. of course stocks trying to find their legs after that selloff on friday. and i'm interested, jim, to know how much damage was done, you think. >> a lot. >> really? >> yeah. i think there's a sense that there's kind of no place to hide. that the market has lost a lot of momentum here because in any given time the fed -- saying,
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listen, we have these hikes. we keep thinking about the hikes, the rest of the world is not that strong. i think we have to find our footing. we've been down, down, down for a bunch of weeks, so we're going to be oversold. but we need some leadership. we need these retailers to say this week, listen, that's what the department store is going for, if the retail can lead us out but they have to tell good stories. >> you mentioned this amazon story before the break, the journal with a piece about how they're moving into private label momma bear and happy belly detergent, diapers, i mean, this is going to impact margins, product placement. >> yeah. look, i know the company can allegedly do no wrong. i do think people like branded product when it comes to some of these things, but when you're coming out of a recession getting stronger, private label is supposed to be doing worse, but if you look at tree house, which is mentioned in the
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journal article, it's done one of the best -- people have gotten used to it with exceptions of perrigo had all sorts of problems with jnj. >> let's get this week started. s&p at the bottom of your screen at the big board this morning it's rex shares celebrating the recent launch of two rex gold hedgedd etfs. blue buffalo, always like to talk about the money people will spend on their animals. >> we use -- you know, they have a big secondary. we use their products because of start a trade war here because they're american. and a lot of people got freaked out by chinese pet food. the thing that made us draw into them was the american flag that's on there right at the top. say, okay, we know where this stuff's from. >> yeah. >> and i think that's management. >> if you're looking for leadership out of retail, does
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this upgrade of jc penney get started, bear now to perform? >> good luck. that's the toughest part of retail. you know, amazon added 27% retail. now of course sears has $25 billion in -- that's what they added. so they added a sears. let's not get too carried away. the problem is they made it hard to mark up goods, so it's not so much that they have taken billions of dollars away from all the retailers as much as they've made it very hard for the retailers to have good price. >> i mean, you could argue walmart did that for a long time. >> yes, they did. i think the example is a good example. >> there's always been somebody putting pressure margin -- >> that's what's going to be important about seeing if walmart is able to sell enough goods at below their price so you get into the store. if i were running walmart now, which i certainly don't want to do, mr. mcmillan, because you have that job -- >> you're busy also because you're running twitter. >> i know, they asked me to run
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yahoo over the weekend. i had to say let me just get to memorial day. >> i didn't mean to derail you. what would you do if you were mr. mcmillan? >> i would say, okay, look, on your app the first ten things i want them to be sold for a dollar. just take the loss. okay. take the loss to get people come into your store, sell things for a dollar that you might have to be losing $18 on, get them in and they'll be loyal. because what is amazon really about? it's about loyalty from price. it's not about loyalty from customer service. they do have those, yes, i like this, i like that. but you give stuff away, some people like it. >> debate has gone back and forth whether it's about convenience or the lowest price. >> the lowest price is not always amazon at all anymore. >> no, but i think walmart needs to make a splash and say here's who we are. here's ten things we make nothing on.
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come to our store. ten things we make nothing on. and then suddenly people they take notice. >> but people, you know, the world we live in now that, such, yeah, they might come for those ten things and then leave and not necessarily engender loyalty. the ability to have information -- >> i'm not going to disagree -- >> unparalleled now in the world we live in. >> maybe you make a tie-in. say, listen, you can buy these things for x provided your shopping cart has this much. >> right. >> i think people will be drawn to it. the reason i say that is because what has been the cohort of retail that does really well? the dollar store. you make things for a dollar that are not a dollar. when i go to dollar tree, and i happen to have an exceptional dollar tree, i always feel like i'm beating the man. the man takes a beating when i go to dollar tree. my kids hate the man. the man came up this weekend at commencement. >> oh, really? >> i said i am the man, i pay the bills. doesn't mean we can't hate the man. >> they hate the man until they become the man.
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>> right. but anyway at dollar tree the man takes a beating. and that's what walmart needs to do. walmart has to take a beating just like -- they just do that. now, they can do the sizes different. dollar tree, the size of raisinettes a little smaller, but just as every bit of fresh. >> speaking of beatings, williams and -- keep beating the heck out of each other. >> yeah. >> the latest by the way in this long running saga we have talked about a great deal and of course others have also written a lot of kcolumns about recently, is williams suing ete not for what we call specific performance, not saying we want a judge to force you to do the deal, but this is to make sure they don't withdraw from doing the deal. and once again williams' board reaffirms its commitment to the deal itself. now, if you're keeping track, williams has sued them in texas. interference. they've sued in delaware to
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overturn this issue of convertal referred and now they've sued in delaware, specifically to say you can't withdraw because your advisors say that you may not be able to get the tax treatment you want. not going to happen. all of this, i think, guys is going to end up as you might expect, in court. most likely in delaware. what we do need first is williams shareholder vote, that could come as soon as let's call it the third or fourth week of june. >> right. >> you get approval there. then you probably do end up in delaware in front of a judge. and you may have some similarities to ibp-thiesen. remember they said they were doing it and said we don't want to do this deal and the judge forced them to do it. but then ete saying we want to renegotiate but that means for them pay a far lower price. williams is willing to say, well, we'd consider renegotiating but not for a
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lower price, simply for a different consideration, maybe you want to give us more equity, we'll listen. meanwhile no offers made. none. they just filed a new s-4 today, williams did. ete has made no actual new overtures in terms of a renegotiation. >> when you look at the concentrations in etfs in money in these segments, these win every time someone says i see that big yield for the etfs and oil's going back, oil at 47, these companies are both worth more. so what's happened, i know they all hate each other and it's a real food fight, but the stocks have gone up tremendously. >> yes. >> because the price of oil's gone up. >> everyone spreading this deal has been astronomical. >> i know. because usually one should be going up and the other come down. >> we may have a day where we're waiting for a delaware judge to say yes or no and it will be interesting. >> i know the group is tracking a lot of money because people think the doomsday scenario's off the table, including
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goldman. remember goldman had the 20 then 45 now it's 50. the goldman guys get up, say hey, listen, if it gets to 50 will it go to 55? >> good reminder of that 25 bear case they made. >> interesting that we talk about. >> in what sense? >> well, i mean, like goldman didn't lose when it was using a much higher price target and went to much -- no one just sat around and said, you know what, we shouldn't bother to listen to them. they've been wrong to the extremes. we put a lot of credence in them. and i'm questioning whether that's necessarily -- >> based on their history it wouldn't be wise to put credence in their predictions. >> so we just -- >> i think we should say what we're saying, well, they're saying this but they haven't been right. >> i know chenos had interesting things to say at s.a.l.t. you take snip-its of what we say of these famous hedge fund managers and don't really get
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the whole thesis. i feel what they've done at goldman directionally what they've done is right. if they'd said oil is going up a lot and now oil's going down a lot, it would be fine. it's the price tag that made them look like their wish s wishy-washy. right it was going to go up but too bullish, right it was going to go down but too bearish. so we give them some kcredence. >> by the way, oil is driving all the gainers today. everything is oil-related with the exception of apple, which is going to be your top dow component. >> yeah, in biotech i think because some stakes are being taken in rege nerneron. go to a barnes & noble, what do
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they have at university? they have books, clothes and they have a section with the iphone students don't like to walk out their dorms because everybody knows would be selfies. where normally would have been books, maybe the great works, shakespeare perhaps or dickens, now there is, you know, laurel -- -es estee lauder. now it's mac where orwell used to be, it's mac. by the way, it's not perfume. it's makeup. because as great as apple is, although everybody hates it, the iphone 7 will not have a perfume moment. it won't smell. >> right. as for big movers this morning two of them are the names we mentioned at the top of the process, anacar pharmaceuticals
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that deal to acquire the company from pfizer has it up 54% this morning. as we reported some people questioning sort of the strategic rationale for the deal but it is not that large including debt at a little over $5 billion for a company pfizer's size of course is not large but one does wonder when they're going to get back to oncology, which is a must-win for them. and tribune trading below the $15 offer from gannett. significantly below it. tribune by the way put statement out moments ago simply saying we got your revised proposal. and we'll take a look at it. as we consult with our financial and legal advisors. >> amazing. anacor, i keep thinking 2018 is when they think it's going to make, you know, work. >> the eczema topical cream they have. >> yeah. would medivation have worked much faster? i don't know. >> i know. they have the expanded label for that prostate cancer drug coming in the fall, i believe, right? >> yeah. at medivation. >> and others in the pipeline.
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>> i know this derma area is very hard, allergan, goldman upgraded it when i was away on friday. >> yes. >> that is their franchise. and valeant, we haven't mention mentioned valeant today. >> it came back a bit today. >> what are you hearing? >> not much. >> you? >> no. >> there you go. nothing this weekend. >> got nothing. >> we are hearing the dow is up 58 points though. let's get to mary thompson on the floor. >> hey, carl, the dow pretty much close to the highs of the session today. we're also seeing strength in transports, little weakness in both utilities and retail stocks today, but it's energy that's driving the bus, energy and materials among the strongest sectors in a week where some of the data or the more important data points come out later with data on housing and also keep in mind we have that g-7 finance ministers meeting at the end of the week and investors will be watching and listening to that for expectations for any signs of added stimulus.
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quick check of some of the sectors here, as i mentioned energy among the strongest sectors as oil continues to move higher. materials also stronger, gold up as the dollar is weakening, and financials also a little bit higher in today's session. we see the yield on the ten-year ticking up a bit. and that's good for that group. just to dig deeper into the energy play today, range resources lower on its bid for memorial resource corporation. exxon, chevron and chesapeake all higher. of course goldman upping its target for oil on the supply disruptions lowering its target for the first quarter of 2017, but by the end of next year does see oil at $60 a barrel. oil right now getting close to that $48 a barrel level at $47.69 right now. as i mentioned metals in focus as well. gold is higher as the dollar weakens a little bit. that's giving a lift to some of the miners. freeport-mcmoran up nicely there. bhp up over 4%. we're watching banks, kbw
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downgrading bank of america saying it's a decent franchise but needs to do more to improve returns, the group in general higher this morning as, again, i mentioned that the yield on the ten-year ticking up a little bit. that's good news for those banks, of course we'll be watching the ipo market as well. june the upcoming month expected to be -- or typically a strong one for ipos which of course is critical to their investment banking business, but of course the ipo market has not exactly been blockbuster this year. investors hoping for a pickup in june and portray better months ahead. buffett impact also being felt today, taking a look at some of the stocks his berkshire hathaway has sold and acquired, lowering his stake in walmart, getting out of at&t, its stock down half a percent and apple the big news as he's initiated a stake there. apple up more than 2%, the dow component giving a lift to the blue chip index along with ibm where it raised its stake in yahoo because he said he would be providing financing to
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quicken's ceo in order to bid for yahoo's internet assets, that being dan gilbert. also want to note biotech. jim was mentioning this a little earlier, positive mention on regeneron and giving lift to its shares. modest gains on wall street recovering from friday's decline. dow up 58 points. carl, back to you. >> mary, thank you very much. let's get to the bond pits as well. rick santelli at the cme in chicago. good morning, rick. >> good morning, carl. you know, it's not the direction of rates so much that's giving us the best clues. it's which parts of the curve are responding to what stimuli. now, if you look at 10s minus 2s, this yield curve's trade is basically the flattest it's been since december 2007. but you know that. let's look at that same yield curve month-to-date. this is really fascinating because you can see how aggressively it's flattened. indeed we've had some better than expected data, but the
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problem is if you look at a month-to-date and break out the 2-year, we're basically up 4 basis points same as a 10 but two-week high yield based on closing yields. and that compared to the month-to-date of the 10-year which is just bouncing along the bottom may be creating some kind of a consolidation or some type of a wedge formation. but the point is if the data was really good, even if the fed brought closer to what's reflected in the long and short end, we want long end rates to outrun the short end, steepening the curve. granted the long end's really confusing, negative rates, other countries generically low rates, all that ends up in this relative value trade and gets very hard to handicap. how do we know this? just look at the demand for some paper that many investors wouldn't have touched many quarters ago. but with interest rates so low it lowers the bar on what is good, what is quality and what gives you enough cash flow to
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take on the added risk. the dollar index for that same period it has improved a bit. that is key. also a dynamic mostly the fed and if questiwe look at a month-to-date of s&p 500, there have been some big swings but that other move in the markets doesn't seem to sit extremely well with the equity markets. carl, back to you. >> rick, thank you very much. rick santelli. still to come this morning, ron johnson, lots to talk about with the former jc penney ceo and former apple executive. that's coming up on "squawk alley" this morning. also ahead texas governor greg abbott. you'll want to hear what he has to say about the presidential election. dow shoots to some early highs up 78 points. more "squawk on the street" is back after a break.
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mark zuckerberg is meeting with conservatives including glenn beck to discussion allegations of political bias. earlier this month facebook was accused of suppressing some discussion. facebook denies. what do you think of this, jim? good idea? >> yeah, i know glenn for a long time. and glenn is very popular on the web. and i think you go to him to show your alg os. people respect his work even if they disagree with him and i think that's where you got to go. i have felt that what's happened is there is a strie dan si they're trying not to have in general because they're trying to make it be a warmer place than twitter. i don't mean to be too atheerl about it but it's not like them to try to have a better user experience. going to glenn makes fabulous
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sense. i think he's honest broker on the web. maybe you can disagree with him entirely, but i think he's someone zuckerberg is absolutely right to go to. >> so humans are involved with the algorithm is what we've potentially learned. >> it's the algorithm. computer science, algorithm, in other words you don't know what you're doing, they do. and i think that that's kind of what he can show is the algos. >> right. algos do a lot. in fact, in the trading of stocks in this country algos are also very, very important. there are a bunch of mathematicians out there who know nothing about the stock market work at very large hedge funds. >> right. they know when one thing goes up the other thing goes down and that's why -- now, it's interesting goes to 47 i think people are starting to say wait a second can that really be good for everyone. but the answer is, yes, look at your market, look at your screen. oil's driving today's market
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because oil's up. i find that's kind of a short-term absolutely true. >> by the way, our show, no algos drive our content. it's all human driven. >> i know, that's why we're throwbacks. >> you're an aberration? >> no, elon musk questioned whether i was a simulation at graduation for my daughter i felt very simulated. >> when we come back we'll get stop trading with jim. "squawk on the street" back after a break.
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time for cramer and stop trading. >> there's a call this morning merrill lynch talking about lululemon being a sell, $50 price target. this is one a lot of people feel that a nike has to buy or under armo armour. nike has had bad luck making acquisitions, so you're really buying this thing not on a takeout basis and people are very skiddish about apparel. i disagree that the stock is going to go that low. i think it does have a real following. they don't report until june. so i think that there's not enough data points to really short the stock or sell it. and i don't want to take, you know -- i'd like to take the
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other side. i think lulu is a more valuable franchise than you realize. >> we are going to talk to ron johnson in a bit. a note out of citi today saying that jcp turning into hd penney won't work. >> no, you can't. you just can't. i know that tjx has home goods. and i know that -- johnson really, i would say, dismantled that portion of jc penney. so let's see -- >> dismantled all of jc penney. left it for dead. >> he is due to come on, david. could you be a little more sweet? >> no. >> fabering? are you fabering? >> i'm not going to faber. >> my producer said, wow, you fabered them. >> tough but fair. >> there's fabering which means too positive and then fabering which means to be fair. i'd rather favor than faber. >> appreciate that.
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>> what's on mad tonight? >> i'm going to faber jim murren, he's a very good record of creating wealth. >> the spin gone well for him. >> we'll talk to him about this mgm -- by the way, nevada's doing okay. gambling is doing okay. little better -- it's funny, macaw not as good. >> may i say to all parents who have kids that are graduating or have graduated, congratulations. >> congratulations, jim. when we come back live interview with chairman and ceo brian roberts. don't go away.
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good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen, simon hobbs. dow hanging onto early gains, oil up more than a buck. let's get to diana olick on home builder sentiment. >> home builder confidence unchanged in may for the fourth
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straight month. the national association of home builders monthly sentiment survey is stuck at 58 -- is stuck at 58. this is the line between positive and negative sentiment. the index stood at 54 one year ago but is down from recent high of 65 last october. the builders cite increased regulations and short supply of finished lots as reasons for stagnant sentiment numbers. confidence usually rises during the busy spring buying season. if the index is three components, both current sales conditions and buyer traffic didn't move holding at 63 and 44 respectively. buyer traffic still can't fight its way out of negative territory. sales expectations over the next six months did rise three points to 65, indicating that builders expect their market to improve. the lowest mortgage rates in three years are factoring into that number. regionally on a three-month running average the south and midwest both saw 1-point gains to 59 and 58 respectively. the west was unchanged at 57. and the northeast fell three
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points to 41. we get monthly housing starts tomorrow morning at 8:30. back to you guys. >> all right. see you then. diana, thank you for breaking that down. meantime little reaction here, stocks holding onto gains dow up 77 here early in the session. oil prices pushing towards the highs not seen since last november. but investors are bracing themselves for another potentially rough week of retail earnings. so how to play the markets right now, joining us greg parsons, and steve wood with us chief market strategist at russell investments. you know, usa today looked at how the markets have stalled almost a year since they reached their all-time highs. steve, a bumpy ride to nowhere is how they put it. what gets us out of that rut? >> i don't think anything does get us out of that rut. i think a bumpy ride, flattish makes sense for markets 2016 in terms of the economy, the volatility may be year own year return for estimates i think
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2016 may look and feel a lot like 2015. from our perspective it becomes less of a u.s.-only story that a lot of people may be looking at. and we've been globally diversified for a good long while now. we think it is more of an issue of valuations. we can get into sector analyalys if you like, we'd be advising investors look globally, europe in terms of valuations the cycle issues there. so i think right now in the u.s. valuations dominate, a lot of volatility, the market looks flat for 2016. >> so better valuations in europe, greg, i think you would agree that you are also bracing for more volatility from this market. >> yes, we agree. >> and how do you prepare for that? >> i think investors need to ensure they understand and identify manage that have very specific asset allocations to sectors fairly insulated to that volatility. as an example mortgage-backed securities, an isolated asset class really tied to the
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fundamental economic growth dynamics of the u.s., right, something that is non-correlated to the larger markets. >> and we do have a big week for housing data. diana just broke the home builder confidence, we'll get sales later on in the week. where are we in this housing recovery? and what's your confidence that it can continue to rebound in a straight line? which it really hasn't been. >> everything we see in housing continues to be quite favorable, right? home prices continue to appreciate 3% to 5% annually. mortgage applications are at three-year highs. and, again, the backdrop of economic factors support the drivers of housing, we think, continue to be solid. >> what happens if the fed raises interest rates in your area? >> you know, if you believe the fed is raising rates because of underlying strength in the drivers of the economy, that's net bullish for us. at the end of the day our assets and collateral tie to a belief in improved economic fundamentals, improvement in housing. >> at the same time you can now argue we have a generation of people that have run up equity
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on very, very low interest rates, perhaps lower in other parts of the world. are we therefore stuck at very low interest rates because if they raise them it could have a disproportionate effect on for example your area of the industry? >> we think about rates not so much as rising but rate normalization. at almost any other time if you had put forth the macroeconomic data and the numbers that we're seeing and i had said the 10-year was at 1.7, a drift back upwards is not so much rising but normalization. >> but people think the long-term neutral rate is an area of huge discussion, that it might have moved down for the reasons we've just been discussing. do you think it's moved down, it has to stay lower longer term? >> our perspective it's not moving up any time soon, right? 12, 18, 24 months out don't know. but over the next 12, 18, 24 months we are a new underrated environment. >> steve, like to bring you in here on the stock market side of things. >> thank you. >> when it comes to interest rates we'll get consumer price and inflation data later in the week, but with a better retail
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sales report and the economy increasingingly looking like it is rebounding in the second quarter, do you think investors are underestimating the impact or likelihood of an interest rate hike sooner than later? >> i think we're looking at two rate hikes in 2016. i think june and december make sense. maybe the fed just wants to be asymmetric with that, but also this is a global market as well. when your looking at german, ten-year yields negative, 12, 13 basis points on the japanese market, that will keep -- you and simon and i have been talking about this for year, this is a central bankers world. while the u.s. federal reserve is looking or itching for a justification to raise rates, they might have to wait a little while to do that. they're probably going to be lower longer than many people expect. you've got negative rates in europe and in japan. >> yeah. >> so it's going to be a lower yield world. and to our mind that means globally diversified, multiasset and active management when volatility gives you opportunities and when valuation
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give you opportunities, you need to be nimble enough to take advantage of that because bankers are going to keep these rates historically speaking lower than many people might have anticipated. >> very quickly since you're talking about valuations and a bumpy ride ahead, steve, before you have liked defensive sectors and names to protect yourself. is that still where you want to be or are valuations in those stocks looking a little rich? >> i think defensive u.s. equity. when one looks at u.s. equity, defensive we think makes more sense in the fact we think it's going to be more chop, higher quality, more defensive balance sheets and earnings statements are going to be we think the way to go, but then again, it's not a u.s.-only world. it's not u.s. equities or cash, so be more defensive, want to look to understood weight your u.s. equity exposure and look globally. is it active globally, europe, japan, that's probably the broader themes that we're looking at when we invest. >> greg, one quick question because we don't often have people on like you, what sort of return do you think you'll be getting your space over the next
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year? what would be a typical benchmark return? >> in the nonagent side seen securities massively diversified, deal at 6.5% to 7%. >> gentlemen, thank you both for joining us to kick off wall street's week ahead. greg parsons from semper capital and steve wood from russell investments. apple getting a vote of confidence today from berkshire hathaw hathaway. a new $13 billion stake in apple. all of that happening as the news crosses that apple has invested in chinese ride hailing app didi and tim cook already landing in china meeting with leaders. that's where we find eunice yoon with more. >> reporter: hey, carl. well, tim cook is on a charm offensive. today he went to one of apple's main stores in downtown beijing, and he was accompanied by the president of didi -- this is the car hailing app company that
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apple invested $1 billion in. so just to illustrate the importance of this new relationship, tim cook got up close and personal with the app. he and the president of didi, jing lu, shared a didi taxi. they went to the store together. and he was posting pictures of his experience to his wabo followers of which he has 800,000. once he got to the store the two took part in a round table discussion with app developers including the founder of another important chinese company, the chinese version of groupon, it's . he was stressing mainly the importance of china's app developers for apple's ecosystem who is also talking a lot about the importance of the government's role in developing the internet. now, tim cook's visit here was widely expected because of the challenges that apple faces here now including the slowing economy, more competition and the smartphone industry and then
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of course the recent clampdown we've seen by chinese government, regulators on apple's services such as itunes as well as ibooks. the expectation has been that tim cook's visit was really meant to try to iron out some of these issues. the chinese media are still reporting he is likely going to be meeting with high-level government officials as well as internet companies during his stay. now, where is he going to be headed next? well, reuters is already reporting on that quoting sources he could be headed next to india. they're saying this would be his first visit officially as the head of apple and that he's expected to leave china tomorrow, tuesday, to head to india to meet with the prime minister there. back to you. >> and just 2% of the market there's a lot to play for in india for sure. thank you very much eunice yoon. how should apple investors take in all these parts? bringing back in gene munster. >> hello. >> as you look at events --
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we'll come onto talk about didi and longer term projects like apple cars or titan, but for the moment as far as iphone sales are concerned to what extent can he boost, do you think, with these activities sales of the iphone over the next one, two, three years? >> well, this doesn't have much to do with the iphone next one to three years. i think what this does do is show that tim cook is on the offense in china. there's obviously a lot of moving parts going on in china. everything from demand to the manufacturing side. and so i think he's really taking care of that piece of it. but also laying the groundwork for what is the biggest question for apple investors which is when is this story going to return to some sustainable growth. and i think that's with the didi investment and i think some of the other investments from warren buffett also kind of lays some of those anxieties a little bit to rest for some investors that there actually is a long-term story. so i think there are two things
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going in play here. >> right. well, let me pick up that. i mean, let's be clear, you believe that there's $60 upside here on apple, which would be a 70% gain from where we are now. on the one hand you have warren buffett putting in let's say $900 million. on the other hand you have the likes of carl icahn who checked out of a stake $5 billion or so and others notably have done that. so people watching now may be confused as to who they should kind of hitch their wagon too. clearly warren buffett is more of a value investor. >> yeah, it does signal a change in terms of the type of investors that are interested in apple. for better or for worse is that when you get people like carl icahn stepping out, he's more of a tech investor, and non-tech investors stepping in, i think that does signal something that we've known for a long time, which is apple's growth is not what it was several years ago. but this can be a growth story that's worth investing. i think that's the message with having warren buffett involved. his stake a billion dollars is
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small compared to what a stake in ibm is, which is around $12 billion. that stake hasn't worked out very well for him, so he doesn't have that track record. but what i do think is this is a starting position and obviously warren buffett does signal this company he believes it's going to be around for a long time and be a worthy investment. i think that's the real takeaway. >> just from a trading perspective, gene, i'm just wondering why your client conversations are like at this point. sentiment in the investor community seems to be very low after first sales decline in a decade reported last quarter, and yet the analyst community maintains its optimism. i know you are one of the bullish analysts that is still a believer, what's it going to take for you guys to capitulate or do you think the market needs to catch up with you? >> well, we're in the camp that the market needs to catch up. and the biggest reason is that growth is going to return. i think the reason why and ultimately the stock is going to rebound when growth returns.
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this echo effect from the iphone 6 that's a bigger percent of pool of people upgrading and the impact is we're going down around 10% to up around 10% in revenue for next year. and i think that it's just that simple as when the growth returns, the stock is going to go up. investors tell me that i'm too early. that there still needs to be another reset. that the data out of taiwan is still negative. and that it's just not an exciting upgrade with the iphone 7. i think that all those concerns are more near-term and ultimately over the next six to twelve months the stock even though it doesn't seem like it today will respond. >> you know, gene, on friday with the didi investment, a lot of people were suggesting this was political. in terms of the functioning of the business going into a ride sharing app like this or social media, do you think it's also an admission on the part of cook that the value in the industry may be changing slightly from
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obviously hardware to more of a software and services area? >> i think so. >> and that apple itself may have to change to a greater degree. >> i think it is. i think it's also a sign that they're getting out of kind of that core hardware business. on the last two calls as you mentioned they're really emphasizing their services business, that's about 10% of their revenue and grew about 20% in the march quarter as 60% gross margins versus overall gross margins around 40%. i think this is a subtle change. the biggest valuations of companies out there tend to be more services related. so i think you're starting to see that small shift around apple. >> okay. we'll leave it there, gene. nice to see you. gene munster there with a big call on apple. when we come back john mallone and about few minutes comcast ceo brian roberts will join us for an interview. dow up almost 100 points.
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they found out who's been who? cking into our network. guess. i don't know, some kids in a basement? you watch too many movies. who? a small business in china. a business? they work nine to five. they take lunch hours. like a job? like a job. we tracked them. how did we do that? we have some new guys defending our network. new guys? well, they're not that new. they've been defending things for a long time. [ digital typewriting ] it's not just security. it's defense. bae systems. liberty global closing its $5 billion purchase of cable and wireless today. the deal expands liberty global's foothold in latin america and caribbean adding operations in 18 countries to liberty global's existing operations in chile and puerto rico. joining us now to break it down is mike freeze, the ceo of liberty global. mike, always nice to have you. deal closes, you guys get a lot -- >> good morning. >> good morning.
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-- a lot bigger in latin america, this is liberty, there's got to be a tracking stock called lilac. >> right. >> does this put you in a position with that currency as well to continue to expand in that region? >> we sure hope so. i mean, this is a terrific transaction for us. it's a game changer in many ways. as you say we've been in that region for a while. we needed to scale up to take advantage of consolidation opportunities but also to grow. the synergies are significant. the market is quite fragmented there. but if you look at mobile data penetration or broadband penetration or paid tv penetration 30% to 50% lower in latin america and the caribbean than it is in the u.s. so we think the opportunity's fantastic. >> a lot of questions on the call about lilac, the tracking stock for your latin american operations in terms of what your plans are for it, how it will be distributed. can you give us any further comment to liberty global shareholders in terms of your expectations about that? >> sure. so the market cap of the tracker after today will be about $7
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billion. 67% of that is still owned intercompany. we're going to distribute that out into the shareholder base. so it will be a fully distributed tracking stock, large free float and then ultimately we expect to hopefully use that currency for further acquisitions. >> europe of course is another area that you have been very active in. in fact, that's really what we know the company for in many ways. and, michael, i have to ask you, since the conference call for your earnings the '02 deal in the uk has been dealt a death blow by regulators. that's a wireless property in the uk that is aus tensabostens. you said while i like optionalty i'm not particularly fond of options that procollude optionalty. what does that mean? >> you were paying attention. it makes sense for us to look at
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everything in a market where we're quite substantial. uk is our largest market. virgin media is doing fantastic things, building another 400 million homes and growing leaps and bounds so makes a sense to look at all options. my first point, yes, of course we will look at that. secondly, if we take a first step doesn't preclude us from taking a second or third step. not trying to be cute and clever, but i think we're just going to be very thoughtful about not just the immediate impact of a transaction like that but what does it do two, three, four, five years down the road. >> right. a lot of people take it to mean eventually you think the possibility of getting together in a real way with vodafone remains realistic. is that something these two companies might attempt to do down the road? is that the optionalty you're talking about here? >> david, listen, i'll tell you right now we are focused on one thing and that is growing our business 7% to 9% at the ebitda line over the next three years. that makes us a speedboat in a
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sea of tankers. so our focus is to stay moving forward. you know, we never say never. we of course look at all options that create value for shareholders, but we are really growing rapidly in that marketplace. so the tide's with us in terms of what may or may not happen we, as i said, fwhewe never say never. today we're focused on growing our business as aggressively as we can. >> talking 5% to 7% guidance for ebitda -- >> 5% to 7% this year and 7% to 9% for the next three years was our midterm guidance. three year 7% to 9%. >> right. a number of the analysts that follow the company don't seem to think you can do it. what are you seeing that they're not? >> well, we have been working for the last year on a program we call liberty go. and that in essence looks at driving three or four key revenue lines. we're going to build 7 million new homes in europe, that's the size of a lot of major cable
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msos. we're going to be driving terrific market share improvements wherever we are. we're looking at, you know, reasonable price increases across our footprint of 27 million customers. most of our 7% to 9% is coming out of revenue. and secondly we've said publicly we will keep our indirect costs which are about $5.5 billion a year, essentially flat for three years. >> right. >> if you put those two thing together, that should accelerate our growth. the onus is on us. we like that kind of challenge. we think we can do it. >> a lot of people wonder about the economics of it. you're tearing up sidewalks so to speak. but the economics of that, michael, what you seem to be saying is do you have to bank on price increases to make that all work? do you get it through cost cuts? how do the economics actually work? >> combination of things. 60% of that growth from a 4% to 5% grow tore a 7% to 9% grower 60% of that is coming from
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revenue. the new build activity alone when we build 7 million homes those are 30% unlevered irr opportunities, we're building say in the uk 4 million homes at 500 pounds a home yet getting 40% penetration. the economics of that are terrific. so the new build is green filled opportunity which we know and love, price increases are just reasonable. this year we took 2, 3, 4% price increases where it made sense, not 10% or 15% price increases. and then driving b 2 b and mobile will also be impactful. if we keep indirect costs flat, of course direct costs will grow, we think we can drive meaningful increase in the ebitda line and that's what we're banking on. >> all right. we'll check in along the way. as always appreciate you joining us. michael fries, the ceo. >> nice to see you. >> nice to see you too. ceo of liberty global. brent back above 50 a barrel. wti 47.71. more on the energy markets and
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goldmans big call. plus an interview with our big boss, brian roberts, chairman and ceo of comcast of our parent company coming up right here on "squawk on the street." it felt like i had just gone to the dentist. my teeth are glowing. they are so white. 6x cleaning*, 6x whiteningá in the certain spots that i get very sensitive... ...i really notice a difference. and at two weeks superior sensitivity relief to sensodyne i actually really like the two steps! step 1 cleans and relieves sensitivity, step 2 whitens. it's the whole package. no one's done this. crest - healthy, beautiful smiles for life. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses.
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well, after three weeks of declines for the dow and s&p, we are starting this monday on a high note with about a half a percent rally. when we come back, comcast chairman and ceo brian roberts will join us on the other side of this break. recently, a 1954 mercedes-benz grand prix race car made history when it sold for a record price of just under $30 million. and now, another mercedes-benz makes history selling at just over $30,000. ♪ and to think this one actually has a surround-sound stereo. the 2016 cla. lease the cla250 for $299 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.
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♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪
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♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. i'm sharon epperson. here's your cnbc news update at this hour. secretary john kerry meeting in libya today. u.s. and other world powers ready to arm the power to limit extremists. donald trump telling britain television if elected president he's unlikely to have a good relationship with david cameron because of the prime minister's criticism of him. cameron telling british parliament last year that trump was divisive, stupid and wrong
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for calling a temporary ban on muslims entering the u.s. a soccer stadium in england was evacuated and manchester united's final match of the season was postponed after a fake bomb was found in a bathroom. the device had been left behind during a security exercise. nchtsz astronaut jeff williams tweeting a time lapse video of sunrise as seen from the space station. currently spending a few months in space as part of expedition 47. that's it for our update this hour. comcast presenting at the national cable and telecommunications expo in boston. and nbc's up fronts are also kicking off today. our julia boorstin is there with comcast chairman and ceo brian roberts. hey, julia. >> hey, carl, thanks so much. and brian roberts, thanks so much for joining us here today. now, here at the cable show everyone is always talking about cord cutting. last quarter comcast mentioned a surprising number of subscribers, how do you make
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sure you maintain that trend? >> fortunately it's been going on for over a year. we've increased our performance year over year on video, broadband. there's a real momentum with the company that i'm very pleased with. and at the heart of it i think is giving customers more innovation and giving them something simple to use, fun and being better than everybody else. and that's the goal and that's what we're trying to show today. >> how much are you seeing a shift to skinny bundles? and how much of that eats into margin sns. >> i don't see a lot of that. it's obviously talked about, huge implications, but in the end the strategy we're on, we'll find you where you are. if you're a college campus, we have a skinnier bundle. but if you're buying our full triple play package, we want you to have every possible choice on demand, on devices, on your tv. >> now, given what's happening in terms of cord shaving and all the new competitors coming to
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the space to sell bundles, why does your strategy of having both content and distribution under one roof make particular sense? >> hey, we had the best first half of the year or first quarter and second half of the year last year that we've had in nine years in video. there's a lot of working together between nbc, universal and comcast cable. we're innovating better than we ever have. our x1 platform is really working. we've doubled the cash flow at nbc universal since we bought the company. theme parks are going well. it's an exciting time to be at our company. and i think that just has gotten better people. they come up with better work. we build products, our services improving every month, every week. there's a lot to be optimistic about. >> now, your x1 platform i had a chance to do a demo really applies an internet experience on top of television content. would you ever consider offering your own over the top service to people who aren't in your cable footprint? >> you know, we haven't found a
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business model that would actually work. it's something that we're not focused on. what we are focused on is take the olympics, exactly described it properly. if you can take over the whole guide, and you suddenly want to see every athlete at the olympics, every country, you want to watch just the gold medal performances, you want to watch 40 different live streams, nine or eleven different live channels, we're going to have over 6,000 hours of content. whereas at the atlanta olympics it was 270. >> but a lot of that content can be available on demand now, which is good for consumers, but the question is that going to eat into ratings and potentially hurt ad dollars? >> great question. our belief is give customer ifs it's 3:00 in the afternoon, i want to watch the crew races, i just got on the live stream and i can watch it on tv, if i want to watch floor exercises, i can do that. or in primetime because there's so much buzz and excitement and social media and now all these
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live streams right on your tv, and on demand content like you said, along comes bob costas at the primetime show. we think nbc will have one of the best olympics it's ever had. in london it was the most-watched television event in history and we certainly have high, high hopes that with all of these options and choices we'll appeal to more consumers, people who go back to your skinny bundle question who consume a different way, everybody's going to have an opportunity to feel and touch the olympics whether it's working with buzz feed and snapchat or the x1 interface that we're showcasing here, talking to your guide and saying how old is gabby douglas and i want to favor her and michael phelps, i think more is more. >> david, do you want to jump in? >> sure. thanks, julia. brian, it's david faber, so many areas -- >> hi, david. >> hi. but one we haven't talked about is wireless. the incentive auctions are coming up. they're going to be here fairly soon. there's an expectation that
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comcast is going to be active in bidding for spectrum. how do you view wireless, particularly of course in light of your earlier comments about reaching everybody on every device with what they want? >> well, i don't have any news today on wireless. what i would report to you is that i think we have more hot spots than any company with xfinity wi-fi. and we found wi-fi to be a fantastic way to get your content. it works better on wi-fi. your home is wi-fi. at this show we're showing the little devices, cable boxes, this is the cable box of the future. it's that small, that thin. same for wi-fi repeaters and routers. i can't talk about the auction because we have signed up. that's not a secret, to at least consider it. we have our relationship with verizon, and we have an mvo with sprint. so we have a lot of different ways to keep options open for the company, but right now what's working best for us about
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70%, 75% of all the bits that are getting consumed are happening over wi-fi when you're not in your home. and that's pretty extraordinary. that includes mobile cellular network. so people find wi-fi hot spots and they love it. if we can give you more of them, that's a winning strategy. >> right. so in some ways i guess does that preclude then all the speculation? some of it ginned up by bankers who want to see you do a deal in the wireless area. is wi-fi enough, brian, to satisfy the needs of the upcoming consumer, the young person now who's not going to necessarily have the bundle but is going to have that mobile device in their hands at all times? >> i think we're pretty comfortable with the company we've got. and as you know the most recent thing we did was buy dreamworks animation. so i think it's more building -- you know, make sure we have access to those consumers with content and with the technology and with the mvo with verizon
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and with our wi-fi and with, you know, in the past we've been in and out of auctions, we've made money doing that. and given options for the company. these are things you consider. beyond that i don't have any real news today or even thoughts on that except that i like the company we've got. and i don't see it changing in that way. >> mr. roberts, it's simon hobbs. can i come back to the central concern of many people, and that's the cord cutting. and what you described as a milestone that alluded you for nearly a decade and the ability to add more video customers last time around. and a lot of that had to do with the investment you would say yourself in the new set top boxes and the voice control. is it your belief that you can actually turn the tide and the assumptions that many people have about cord cutting longer term? i mean, could we say actually that it's not the phenomenon on the scale ultimately if the investment continues that many people have predicted? >> look, i don't have the perfect crystal ball any better
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than the panel you're with, and analysts and investors, but what our company's trying to do is make sure we're really available to customers wherever they want to go. some customers clearly will not buy a bundle. some will want a skinny bundle. and some will take it a different way. and that's part of why we bought nbc universal. that's why we're adding content with dreamworks. at the same time the investment we're showcasing here for customers who do want every choice, it really is affordable entertainment. and it's incredible value when you add up the tens and tens of thousands of choices you've got. so the big problem was how do i get to what i want? and that's where the voice remote that we're showcasing here, our olympics version of a voice remote but it's really the same remote, we put 7 million of these devices in people's homes just in about the last nine months. 70,000 a day. and the feedback we're getting
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is it's a game changer. to be able to talk and things happen, watch cnbc, there you are are, i'm watching cnbc. find olympic moments i'm interested in and it will do that. or a movie or content. so i believe a generation will perhaps start one place and when they're having kids and their families and tvs are 100 inches and bigger and 4k, they may very well find their way to saying i like that bundle of choices, just here's my personalized version. so we're also in broadband as people do so-called cord cut, we had the best broadband first quarter in four years because we sped up our internet 14 times in 12 years. these are the investments we're making in technology as we transition from a cable company to a media and technology company. and that's the answer best, i think, of how you can't predict the future but you can try to be really relevant and unique in
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that future. >> now, you just mentioned your recent acquisition of dreamworks animation. why does it make sense right now to buy that kind of content? >> well, starts with jeffrey and the board of dreamworks was apparently going to transact and do something, they probably concluded as a stand alone public company they could do better with more access to capital, with perhaps more access to the assets we can bring and jeffrey was nice enough to tell all his employees when i was there recently meeting some of the folks was that we built one of the great brands, iconic brands in the world for family entertainment. but to now have it be part of nbc universal where it can be in theme parks such as orlando and soon-to-be in beijing, or part of universal pictures and some of the illumination working together to just take some of his great 20-year achievement
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and the team at dreamworks which has created favorites for families such as "shrek" and "how to train your dragon" and "kung fu panda". >> you mentioned theme parks, new harry potter attraction in los angeles at universal studios, but you're also working with dreamworks animation with some of those properties overseas. what can you tell us what to expect in terms of global expansion? >> this is a great way for us to globally expand. we've noticed how successful these brands travel. and so there's a park in singapore, we of course bought 51% from goldman sachs in a syndicate of private equity investors and we're doing really well there. that was in first quarter results for the first time. and we are working to finalize agreements for really exciting attraction in beijing, the scale
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of orlando. and, you're right, harry potter even when we don't own the license content, has given momentum, you have seen wonderful things in the next five years in the theme parks in the u.s. and around the world and having dreamworks now part of the family will only make it better. >> just a final question before toss back to david, you mentioned the studio of course with these new attractions. comcast is the leader in selling digital movies. digital sell through. what do you think about this idea put forth by sean parker of compressing the windows and selling movies sooner? >> well, i don't think it's a unique idea to sean parker. people have been talking about it for years wouldn't it be great to have it in your home. there's a lot of reasons why it doesn't happen right away. but i'm glad and happy to see the push to try to make it happen because i think it's something consumers would love even if it's a slightly higher price point, then you have a
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choice. at the same time movie theaters are a huge part of the success of hollywood and we have to respect that and find that perfect balance. and these conversations are just helping progress that. so in that way it's a very good thing. i would say as you mentioned the change, you look at another benefit is consumer products. it's not just digital products but also all those brands we don't have the scale internationally just with our own product maybe dreamworks doesn't either, together along with universal maybe we have a much better consumer products opportunity as well digitally and in part goods. >> very interesting time to watch that acquisition. and i know your nbc up front is happening today. >> it's an exciting day for the company. the nbc upfront, it's the first time, i think, any broadcast or cable company has combined it all into one upfront for the advertising community to see the scope from digital assets to cable to obviously nbc, the new season looks really exciting.
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seeing all the pilots and bob greenblatt and the team are continuing the momentum of the turnaround of nbc. and with thursday night football and the olympics coming, i'm pretty sure we're going to have a fantastic next 12 months. >> great. brian roberts, thanks so much for joining us. david, back to you. >> thank you very much, julia, of course joined by chairman and ceo brian roberts from comcast, our parent company, talking about so many of the different issues that are affecting the broader business if you will, including cord cutting, cord shaving and of course broadband being the key product, simon. if the margin is there, and the equity is there and that's what these companies are becoming, not really -- not really willing to venture too far into wireless in terms of some of these questions that are out there as to what the company's ambitions may be, do you need to follow your customer everywhere they go or can you do it with wi-fi as mr. roberts indndicated. >> it's an interesting assertion
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that you can prevent the cord cutting by improving the technology. you know the average person in this country still watches almost three hours of television a day. therefore maybe we've misrepresented how that falls in the family budget. >> and you can ttalking about t consideration of the bundle as well may be something economic when you have the family at home and big 100 inch screen sitting there. of course simon has one of those. >> two 65 inch. >> okay. >> one curved. >> sports. >> okay, let's move on. >> let's get to kate kelly breaking news on hedge fund positions. >> david, how are you? so 13 filings in since friday, seeing some newfound love i should say for apple despite the fact shares have been beaten down about 20% in the last six months. leon cooperman of omega advisors, a seasoned stock picker with many winners over the years adding to a position in apple to the tune of 227,000 shares, that's actually a new position. so that may be giving a lift to the stock potentially.
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we also saw of course this morning that warren buffett adding a new stake in apple to the tune of nearly 10 million shares, perhaps that's the bigger benefit to the stock of the two. one other note on omega, they actually paired down a google -- rather alphabet class a position to the tune of about 277,000 shares. so a different tech move, a different directional tech move there. and finally i would note david teper his filing out on friday but his firm sold about 1.25 million shares of apple dissolving his stake in the process. that's of course through the end of the first quarter, david. so things could have changed since then, but based on what we're seeing new omega stake, big new berkshire stake and very well could have an influence here. >> so it's buffett, cooperman versus icahn/teper, got it. >> right, the titans clash. >> absolutely. thank you. and apple is leading the dow right now. we're going to have much more on this market rally. dow's up 92 points. half a percent. s&p 500 up half a percent led by
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energy companies. and later the governor of texas is here at post nine. we'll talk donald trump and how he sees the republican race when we return. here at the td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade.
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is the bond market presenting a warning sign about the economy? a reason to buy stocks or perhaps both? we discuss. the call just came in. she's about to arrive. and with her, a flood of potential patients.
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a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t. we are making new highs intraday with the dow up nearly 100 points, 107. apple and caterpillar lead the charge. there's wti crude oil charges, up. looking at the highest level since november after a bullish call from goldman sachs saying we are in a deficit when it comes to stockpiles sooner than expected. let's send it to rick santelli. morning, rick. >> good morning. thank you. like to welcome my guest, aloha
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from hawaii, i would suspect. >> aloha to everybody from honolulu today. >> all right. charles, you have done something that i would call one of the better meldings of technical and fundamental analysis. you draw technical conclusions but use pretty much fundamental type data. outflows a, flow shrinkage b, the intertwining of those two equalling price mostly in the equities market but fixed income as well. tell me how these flows both since the february bottoms and then the rebound and now kind of the back-off again because here we are, up half a percent in the s&p. tell us what it looks like. you have had a hot hand. >> well, we have seen a dramatic slowdown in announced corporate buyings, down 35%, 40%. cash takeover announcements are down even more. cash takeover could be
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ic of the decline -- the other thing is wage and salary growth as evidenced by wage and tax withholdings as reported every year. a year ago we saw a hfty start to the year in terms of stock buy-back announcements, cash takeovers and the outflows from u.s. equity mutual funds and u.s. equity etfs were small last year, first five months. now we are seeing a significant pickup and outflows from u.s. equity mutual funds and u.s. equity etfs and a significant slowdown in announced corporate buying so the combination of the two doesn't look very healthy. we have had a few weeks of down market and markets as ed hart used to say, markets trade their which to perdition, they never go one way. >> my question to you is let me stop you there. if you were a stock investor and
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you whittled down your position, you have nothing on right now, what's the percentage trade for this point moving forward? do we basically hold unchanged 2015 levels? do we hold here and move higher? or should you be patient and watch the paint dry for awhile? your thoughts? >> well, i would be patient until the fed recognizes that the economy has slowed dramatically. we have seen wage and salary growth slow dramatically since the early part of last year. it's been a straight down slowing, slowing, slowing. occasionally there's a pickup in wage and salary growth. that slowdown seems to be evidenced by the economy. look, the only two good economic numbers both come from the government and they are both based on seasonally adjusted surveys. retail sales -- >> be specific. okay. retail sales. >> and b-l-s, the jobs number is a survey of a few hundred
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thousand employers and they seasonally adjust those numbers so you have seasonally adjusted surveys in a world of real-time information. the only good numbers come from the government. real-time data from everyone else says the u.s. economy is slowing and you see corporate buying announcements slowing and people are taking more money out of the market. until the fed releases the next batch of helicopter money, i wouldn't want to be long, very long the market. i'm always long. >> charles, we are just about out of time. i have to stop you there. it sounds to me like what i hear you saying is left to its own fundamental economic devices, the economy seems a little bit slippery, at least that's what i walk away with. thank you for being our guest. first of the week. we will go back to sarah. >> rick santelli, thank you very much. up next, a lot more on apple and of course, on this market move, every sector in the s&p green except for telecom.
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and on "squawk alley," the former jcpenney exec ron johnson. will the retail wreck continue? that will be a big question this week. he's coming up in the next hour. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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good morning. it is 8:00 a.m. at apple head:quarters,' 11:00 a.m. on wall street and "squawk alley" is live. good monday morning. welcome to "squawk alley." carl is on assignment. myself, jon fortt at post nine.
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also joining us, cnbc senior markets commentator. mike, good to have you. we start today with apple rallying after warren buffett's berkshire hathaway disclosed a stake in the company. meantime, david tepper got totally out of apple, dumping about 1.2 million shares valued at around $133 million. this also comes as ceo tim cook is taking a visit to china. the co-founder of elevation partners joins us from palo a s alto. is berkshire hathaway recognizing that apple is the ultimate value play? >> i believe it is a tremendous value play. i'm strongly in warren buffett's camp on this particular thing. it's got -- it's got no growth for the next year, i suspect, and who knows for how long thereafter. but at 2.5% yield, extraordinary cash flow. i think great management.


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