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tv   Squawk on the Street  CNBC  October 27, 2016 9:00am-11:01am EDT

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education. >> i think it's neat to see efforts of you and jack in this regard permeates all the way down to elementary school. >> that is exciting. it's good to have kids talking about it as young as possible. >> only more kids go into politics. we need more of them people. >> exactly. if they're going to succeed. anyway, great having you. >> thank you for having me. >> well, this is me, make sure you join us tomorrow. "squawk on the street" is coming up next. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla, jim cramer, david faber at the new york stock exchange. this is it, the single busiest day of the earnings season arriving along with the biggest ipo of the year. europe is mixed, uk gdp comes in up 0.5. deutsche bank ekes out a profit. durables a slight miss, but that ten-year creeping up to 1.82,
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that's the highest since june. road map begins with twitter shares in the green after the company plans to cut 9% of its global workforce, better than expected results in the third quarter. >> plus, qualcomm's buying nxp, it's the largest semiconductor deal in history. steve mollenkopf will join us late ner a cnbc exclusive. and tesla shares moving higher after reporting a surprise profit setting a new record for quarterly revenue. but first up, twitter announcing plans to cut 9% of global workforce as part of restructuring. the company also posting better than expected third quarter results, monthly active users up 4 million from the previous quarter. mobile representing 90% now of total ad revenue, which rose 6% from a year ago. and they go into the fourth quarter, jim, which they said on the call is the strongest for ad spends. >> when you sit down and take a look at the numbers very closely, it is still a mix. i can tell you that the fourth quarter guidance is a miss. u.s. is only growing at 1%. but the daily average users are
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showing some acceleration. >> up 7%. daily average user base up 7%. >> which is -- you know, quarter-to-quarter is the way you would look at that and that's absolutely not bad. mid single digit grower, is that good enough at $18 price. now we're going to be looking at the company saying the layoffs were done in the sales business because that industry's changing and how ads are done are changing. no layoffs in the development business. but in the end i come back and say better than expected but expected was not good. >> right. the fact they pulled revenue guidance for the fourth quarter is certainly something that is not cheering some investors for q-4 or the full year i should add. so that has people at least a bit curious. should you be focused more then on ebitda? they did cut as you said from three sales channels to two sales channels. >> right. i think what's important is when people look at this, it was not the disaster some people
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expected. and i know this was one where they had debates, which is obviously one-time only, but everyone's been complaining about football. this time football was good. nba good. the sports may not be so great for other guys, sports is working for twitter. and i think that's important. >> only two of the nfl games were in the quarter. >> right. but they have an nba package. >> averaging a couple hundred thousand viewers, is that enough? >> no, but i think it's a start. i think what people say is they have a niche here, and the niche is, you know, you watch tv, you watch some sports and how you watch it i think that when you look at the articles about tv viewing, this was not the year to make your bed with the nfl particularly thursday night games, which have been disappointing. just in terms of the actual content of the games. but you know what, i say, hey, some people saying it was going to be disastrous quarter and that was not true. >> it was not. right. >> dorsey on the call by the way was not per scoped this time says he's not going to discuss
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m&a anymore. at one point an analyst asks, are you going to do anything revolutionary with the product? he says product is revolutionary. >> well, okay. that's nice that he said that. >> yeah. and i think they have moved on from potential sale of the company. >> definitely. and i think marc benioff has moved onto other things. >> after marc benioff basically whack, whack, whack them. >> you know basically refused to kiss them. he's a good friend of jack dorsey. >> yes, be careful being good friend. i'd hate to see what he does to his enemies. but you know, they were there 29, salesforce, and then they weren't any longer. >> right. i think the shareholders looked at -- it will be very interesting because you could make a case that twitter is worth something to someone at a higher price on a basis of just the raw fire hose of data that can be used through artificial intelligence, which is a continual theme of this quarter. but i think they're still focused on ads, others would be
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focused on data. anyone who buys this is not focused on ads, they're focused on data. >> let's move on now. speaking of data and the internet of things, qualcomm agrees to buy nxp for $110 a share in cash. valuing the chipmaker at $38 billion. when you throw in debt total enterprise value of the deal around $47 billion. the combined company expected to have annual revenue of more than $30 billion. we of course told you a little over a week ago it would be $110 cash. we're going to be speaking with steve mollenkopf later in the show about the deal, of course, which is a huge one for qualcomm chrks from the financial perspective able to use overseas cash to pay for this deal and borrow overseas and then pay down the interest on that debt with overseas earnings. that helps a lot when you can do that. >> because nxp is a dutch company. >> a dutch company. but even beyond that shareholders have been cheering this and will continue to this morning because some had thought perhaps the number would be a
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bit above 110 even though we told them it wasn't going to be. >> this was a brilliant deal for qualcomm which had been pigeon holed, suddenly it's the company of internet of things and autos which are the two hottest areas we discuss over and over again. nxp private equity company sell $30 down but this is one of those deals that's made in heaven. reminds me what pfizer wanted to do with allergan, because you can borrow overseas. >> use overseas cash which no longer you're going to be taking a huge hit on if you ever were to bring it back. instead it's going towards producing a lot more value. there are some questions about accretion. they weren't giving specific answers. some people think, jim, this thing could be extremely accretive. >> i think qualcomm goes from being at one point inexpensive stock to perhaps being among the cheapest in the entire tech sector. that's how good. remember, nxpi was a company that if you had to be able to see earnings out a year from now
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because of driverless car, because of internet of things, it would have been incredibly low as a price range ratio versus where all the others are. >> a div hike. >> 50 cents, which is incredible. these companies -- where i'm going here is that the semiconductor companies are the standout for the quarter. >> this is the big move by qualcomm, of course. they see it and he said this on the car, the autonomous vehicles and the internet of things is equal to the opportunity they had for hand sets in the 1990s. >> think about how powerful a statement that is. tesla call was internet of things, driverless car call, throughout this quarter whether it be gm or ford this morning those two companies are regarded as being legacy companies. it's almost like they're digital equipment and ibm and we're speaking about intel and microsoft. and i don't know whether that's fair, mary barra is doing a good
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job, mark fields not doing as good a job in terms of actual numbers this morning, but those are being viewed as evolutionary. we want to take jack dorsey's words, and revolutionary is nxpi qualcomm. my hats off to mollenkopf because there was a time people said he was hostage to chinese deals and apple. he ain't hostage to anything. >> no, dealing in terms of problems over there, they resolved that. >> yes, he did. a lot of good. >> got activist out of their stock, i should say, did the big buyback and embarked on this big deal. regulatory wise it's going to take awhile. there are a few who think it won't get through. >> multiple jurisdictions it's in. >> we're talking over a year. it's amazing how long everything takes to get done these days when it comes to these large deals. >> a lot of people are saying, wait a second, 110 deal, why is it only 110? because it's time value money. >> speaking of cars and tesla, that surprise profit in the third quarter 71 cents on an operating basis, revenue above
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consensus, also maintaining guidance of 50,000 new deliveries for the second half of the year. elon musk talked about the current quarter on last night's earnings call. >> currently believe that a q-4 will be profitable excluding noncash expenses i think there's a chance that we'll be -- there's a chance that we'll be profitable even including stock and noncash stock base -- >> trying to answer questions about whether or not they're stealing from q-4. 3.1 in cash, trimming their cap x guide for the year. >> they put -- look, the people who love tesla stock will love it today. the people who hate it will be angry. they'll point to the underweight piece that j.p. morgan has where the beat, which looks like 113 is not real because there's a 40 cent addition in there. the zero emission vehicle numbers they include. remember that's a nice benefit
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for them. but in the end there's two teslas, tesla obviously doing i think making cars better and more cheaply. and then the tesla buying solarcity. and there's a lot in the call about, hey, wait until you see how great that is. but no one -- i think i shouldn't say no one, there might be people like that part of the deal, but this was an impressive quarter. and i'm sorry by saying that there will be bears who despise me. but when i was on the call, which is very funny by the way. they're funny. they're having a conversation. it's kind of great. reed hasting has a conversation, and tesla has a conversation, is it not interesting those are the two cult stocks of our time. there is a moment where i believe they're talking about mobileye where musk curses. that was also novel. i haven't heard anyone curse since -- oh, since -- >> who was it? >> enron, jeffrey skilling. >> oh, yes. >> that was a funny moment. >> when he says they don't need to raise further capital, although leaving the door open for it, do you believe him?
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>> look, it's kind of if things aren't as great as he thinks with the model 3, then no, i think he'll need more. the fact is it was good cash management. which is something you don't expect from tesla. i'm not telling people -- i'm not saying, listen, this is the moment to buy tesla. i'm saying if you're short tesla, you're going to try to dig in your heels but the story was a little better than we thought. how about that? fair? >> i think that is fair. >> okay, thank you. >> what's the multiple on this stock? >> well, i mean, you know, you could argue on 2018 numbers the multiple is, you know, 40. >> 40? that's it? >> okay. i'll take that. >> all right. >> yeah. >> within the range of reasonable -- >> yeah. >> -- integers. >> yeah. tesla's a funny beast because the conference call they were really like if you match that with the gm call. gm has great cash flow, fabulous dividend, and it's like the difference is like a call for like the treasury department if they had a call for u.s.
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treasury, imagine there was a conference call for every quarter for how the u.s. treasury is doing. well, i mean, that's what gm's being viewed as, being a bond market equivalent. and this being the growth stock. i'm not going to fight it anymore. if you love it, love it. you know, it's like the alka-seltzer ad the other day, try it, you like it. >> you tried it. >> we're going to get to ford along with bmw, a lot on dow, exclusive with dow chemicals andrew liveris. png shares up double digits since david taylor became ceo a year ago and sara has exclusive with him this morning. dow has not had a triple digit move in 11 sessions. that's the tie for the second longest streak this year. more "squawk on the street" from post nine in a minute. my business was built with passion... but i keep it growing by making every dollar count.
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dow chemical shares seeing premarket gains, strong quarter earnings above wall street expectations. a short time ago jim and i spoke with andrew liveris and we began
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asking about china and whether a talk of slowdown in that country is premature. here's what he said. >> it's spotty, and it's not even. and depending on which part of china you're in and what, i mean geographic as well as in-use market, i mean, i just did a panel with walmart ceo in china. food safety and food quality is huge demand for the products that go into that. and remember, jim, we're not just chemicals, right? we're materials. and the materials like packaging films, films that can actually preserve food in china, those are growing through the roof. ecofriendly products of any sort, beijing is still heavily polluted, all the big cities are. and then there's the geographic expansion to the west, to the north. new cities, you know, you probably don't know where it is it's on the western part of china, that's growing double digits. i would say there is a lot of demand in china, you just have to have the right products and the right drivers have to be
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fueling those products. i would agree that there is an industrial china in commodity china, in asset intensive china there is a slowdown. and there's also a lot of money going into property again, and that's, you know, stimulus oriented but they don't have much choice about where to put their money. look, it's not even. i mean, you have to be in the right mix. >> yeah. andrew, in the limited time we have left of course, it seems as though since you announced the dupont deal some time back now at this point, there's growing concern about the regulatory response both in the u.s. and in the eu. what gives you the confidence that you're going to be able to get that deal through the regulators both here and in europe? >> here, europe and china and brazil. >> right. >> so those four key jurisdictions. we've got over ten approvals already. and we are deep into phase two in the eu, which of course gets
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a lot of publicity. you know their process is quite complex, and they do in fact file from time to time. we are expecting regular filings. that is part of their process. we're into q-1. we're a few months delayed because of the complexity not just of the deal but of course what you indicated, the complexity of the environment. and there's definitely a need to look at every deal. and we're the first in, remember our deal got announced before everyone else and we filed before everyone else. >> you did, but i mean there is concern about syngenta and chemochina, and you've got bayer and monsanto. i understand you were first in, but on agricultural it would seem as though you're part of a pretty crowded party right now. >> sure. sure. and, yes, contextually, everything you said is right. but by first rules we're in. and remedies get negotiated on a first-in basis. look, we've had no surprises.
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it is a little complicated. it's a complex process. i would expect, you know, in the next few months that we're going to know a lot more about the exact timing. but we still fully expect this deal to close. it's not just the ec as you noted, it's doj and also mollenkopf in china. as i said earlier i'm quite confident we'll move through earlier as per expected. this deal will close, a few months in the context of $30 billion of value creation is nothing in the scheme of things. the most important thing though, and i believe ed breen talked about this the other day is we're gaining time on the other parameter, which is readiness, synergy readiness, organizational readiness and speed to spinning these three businesses out readiness. we're gaining time on that as we lose time on the regulatory process. >> all right, andrew, we're almost out of time. one last question. the buffett prefer, which is hung over your stock forever really kind of a massive roadblock to 54, 55 level,
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what's the story with that? is it a few more days and we're okay here, or is that thing going to be with us forever? >> well, i have a whole viewpoint on that that my team's quite aware of and that is keep performing like this is 16 quarters in a row now of eps growth year on year, 12 quarters in a row of year on year volume growth, you've already noted our business mix performance. we're stunningly performing despite everyone's predictions. and as you keep performing, people are going to say, you know what, nothing's going to stop this equity keep going north. and with the deal value in front of us, i should mention dow corning, we're over delivering on the synergies. we have our saudi products starting up as we speak, we have the big u.s. [ gunfiregulf coast investments. tail winds to head winds including cash flow, i believe you don't manage for one situation like the buffett preferreds. we'll keep performing and you watch that equity price.
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>> all right. thank you very much. andrew liveris, dow chairman and ceo. we'll get the opening bell when we come back. still got to get to u.p.s. and ford, biggest ipo of the year drops today and google, amazon tonight. back in a minute. sick of getting gouged for limited data? introducing t-mobile one. one price, all unlimited for everyone. get 4 lines for $35 per month each with unlimited 4g lte data.
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that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20. ♪ time for a mad dash on this thursday as we're counti ining to the opening bell. we're going to talk a little nfl and chicken wings. >> you know what's interesting, david, this is a quarter where each day's coloration changes. today is a day where i say things aren't as bad as we
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thought, whether it be twitter or buffalo wild wings. there had been a sense buffalo wild wings same store sales had been on the decline. they're a little better. remember they have an activist in there actually trying to make things work. and next year they're forecasting a little bit better. they do have nfl. it does matter. their takeout business was better. but the theme of not as bad as it was extends by the way to cake, to cheesecake factory. so you have situations where expectations have fallen so low, whether it be twitter, buffalo wild wings, cheesecake, that when the companies report people do a breathe of relief or they cover or they go long. >> there's been this emerging theme that you discussed of people staying home. >> yes. that's an issue takeout numbers were very high. >> i know. >> and i've spoken to sally smith ceo, we often talk about the notion i own a bar and the worst thing in the world is to have takeout. why? because we only make money on the food when you really want to make money on the beer and on the liquor. buffalo wild wings is kind of
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addressed that situation. i would say this, if you have a -- if you're optimistic about 2017, this is one of those stories where you might want it if you buy it here. i happen to think the go-out thesis is not that good anymore. i think the stay-in thesis is better. cheesecake talks about the experime experiment, if you go out and it's exciting, then you will go out. and buffalo wild wings is exciting. >> you may have heard some of those cheers, zto getting ready to trade here at the new york stock exchange, a chinese delivery company listing here. large ipo, 15 times over subscribed. we'll give you details when we come back with the opening bell. important step forward. the time is long overdue... pharmaceutical industry. passes - the ballot.
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you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in 90 seconds. man, a lot going on today. all the earnings, some of which we've not yet gotten to, we're going to get gdp tomorrow. and already we're seeing numbers like 2.9 and 3.2 and some maybe upward revisions today based on
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what we got. >> i was mentioning earlier that the stars of the quarter semiconductors clearly. if you go to the texas instruments last night they're saying look industrial automotive very good, automotive talking cars with much more sophistication in them. i had snappon toon tools on las night, you can't fix the cars with a wrench anymore. boeing, united technologies really unbelievably good aerospace and defense, whether it be lockheed martin, the defense budget is going higher. but bahrain, uae, the middle east is arming. the middle east is arming, and they buy it from us. don't forget, boeing by the way -- i know a lot of people are cynical about iran, wow, what an order. they're going to get that order from boeing. >> yeah. dollar is now looking at its second biggest gain, monthly gain of the year. >> yeah, not helpful obviously. >> people saying maybe momentum
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is easing because confidence has been so off. >> we know the dollar's probably reacting a great deal to what's going to happen with the fed. you're seeing some of the banks really break down here, the money center banks, whether it be a citi, a keybanc, those are -- >> that's the opening bell and the s&p at the bottom of the screen. at the big board zto express, a delivery company in china celebrating its ipo, which is the biggest in the u.s. this year raising $1.4 billion. over at the nasdaq celebrating its ipo, raw pharmaceuticals, lively crowd here for zto. >> yeah, exciting. >> priced at $19.50, which was above the high end of the range of 16.50 to 18.50, big play on logistics and e-commerce in that country. >> mentioned oversubscribed 66% of the deal went to the top 25
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accounts. so they're looking for long term holders. >> wow, geez, that's not bad. if you look at e-commerce is something that's another part of the economy that's very strong, u.p.s., i had a number i actually liked very much. and one of the things that this is -- you know, they have international profit up 14%, but i thought what was interesting u.s. domestic deliveries per day climbed 5.7% driven by e-commerce. a mid to high single digit number in deliveries is really rather extraordinary. extraordinary. by the way, planes to be able to deliver products by e-commerce, free commerce, boeing cited that. e-commerce is some positives in it, not just destruction of bricks and mortar anymore. >> apparently, the cheers we're getting here, you can see the shot, the chairman on the balcony asking are we cool and the crowd responding in kind. when you put this together with reports of snapchat now looking at $4 billion, talk about pal
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entier in 2017. >> snap, i think if they do $4 billion, that stock is going to be like what happened to twilio, acacia. snap is a company that's going to resonate with the millennial fund managers. >> yeah. snap will be a -- >> doesn't matter what price they do it at. >> it will be a great deal of flourish attendant to snapchat's ipo. >> that's going to be the most exciting deal of the year. just like i think qualcomm, nxpi, time warner, att, exciting deals. you would think what would happen is people would be excited about the market. i went to a conference last night of technicians. and everyone's just kind of -- no one's really excited about the market, yet there are many things within the market that are very exciting. a $47 billion deal gets done yesterday. >> i know. >> and people, sai, oh, you know. >> well, we've known it was coming for a little bit. and we knew the price too. >> you knew it was coming. congratulations. >> a huge deal no doubt.
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>> david, why aren't we bidding up goldman -- >> evercore advised on it -- >> deutsche bank beat expectations. >> deutsche bank. >> deutsche bank. >> yep. slightly lower than expected litigation expense. we'll see if that continues. >> that was justice department per share we call that. >> you know, yesterday our parent company comcast reported earnings that on the face looked fairly good, but the stock ended down about 3%. charter, the second largest cable slash broadband company in the country also was down even though it had not reported numbers. do you know why, guys? >> why? >> because of that directv now product at $35 with 100 channels. that seemed to be pressuring the shares of the two biggest cable companies in the country. this idea being that it will encourage cord cutting. because for $35 you're going to get an awful lot of value. of course that's an at&t
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product, the directv now bundle we just heard about yesterday where it would be priced. it was interesting. unexpected that that was the reason, but i believe it was. and they're down again today, a little bit. ever so slightly. dish as well. so keep an eye on that. as we sort of watch that area. fox shares were up by the way yesterday rather nicely because comcast told us its programming expenses were going up so people will be paying more money to the likes of fox and other content companies. >> it's interesting comcast on -- i own comcast, you know, parent company. but on the surface the numbers look great. we're not used to hearing a challenge, but david, i would come back and say fios has a skinny bundle and that didn't hurt comcast, so why does it this time? >> because this is $35 for 100 channels. it's not skinny. it's fat. >> it's obese. >> it needs to go on a diet. >> it's a zoptic. >> yes. >> ford closest to the lowest levels since february.
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i know you have this idea of peak auto. >> yeah. >> i'm looking at journal in sub prime auto lending up again? >> yeah, i'm not as -- i mean, i talk to the banks involved with that. they're not as concerned. i'm not as concerned about sub prime auto lending. i'm far more concerned about student loan lending. but i've got to tell you when you look at it in the end for ford, there's just a bunch of negatives frankly. there's still profitability but almost every metric, metrics were lower than a year ago. that's why that stock is down. and i will say deservedly down. deservedly down. >> the cheers still continue here for zto. >> yeah. >> cheering is big in china. >> yes. staying focused. >> bristol-myers, 77 cents, beats by 12 revenues ahead they raise their guide for the year $3 billion buyback. >> my travel trust owns bristol-myers. here's the problem, it's about the future, not the current.
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the current optivo is very good, el questions very good, company does a buyback. i think people who hate bristol-myers will in an hour or two hate it again because people are thinking about the excellent key true to numbers from merck that merck has a better drug for lung cancer. speaking of cancer, the numbers from cellgene, amazing 30% year over year growth has to be called out. celgene stock one way trip down of course we may have to rethink that. of course these are heavily involved in the political season. >> they are. after the bell we get earnings from amazon and google. and as you might -- or alphabet, excuse me, as you might anticipate a lot of, well, expectation there. some nervousness on the part of investors when it comes to amazon's earnings, guys, in part because they -- this quarter lapse the first introduction of
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that prime day which did very well. >> it's very good point. >> and so if you're looking for the same kind of comps on sales this year over last year, you got to remember last year over the year prior last year was the first year, you following, that included prime which helped that prime day really did help. >> scrutable on the conference call, conference calls from amazon sometimes they decide to tell you a lot, sometimes they choose not to. >> now we have this business inside report of plans for physical grocery stores. i know you tweeted that this morning. >> yes, i thought it was very important. >> the notion of having 2,000 of those in north america. you have four analysts with $1,000-plus targets. they just spent $70 million to do eight episodes from the guy who did "mad men." so the news flow's been heavy. >> it has. >> stock is up 165% since the middle of january. >> well, i also point out the readthrough for u.p.s. makes me feel like don't sweat the
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program. >> aws growth a lot of investors looking for mid 50s versus 58% year over year growth for amazon web services in the last quarter. and that's where so much of the earnings come from given the incredible margins they have at that business. >> well, look, there's a lot -- you know, it's interesting. s sara's out at proctor & gamble and i didn't get to ask her some questions i would have liked to, but amazon's very tied in with certain products you use daily. and you press a button and it comes to you. and i think amazon, if they could get the grocery store -- grocery store's been a big problem because as walmart would tell me do you really want that food sitting at your doorstep? and the answer is, well, we'll take care of that too. >> yep. on alphabet, guys, i think a couple of thoughts, operating margins certainly will be important there. they continue to increase, and will they again for this quarter that they're going to be reporting at alphabet. and then some questions about the buyback too, because they
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exhausted their buyback so quickly. they have what $78 billion in cash on the balance sheet. >> so much overseas, david. >> $48 billion on shore, $36 billion -- $48 billion of $78 billion is actually on shore, rest is offshore. >> okay. this is the ship tightening. i felt the decision to not go more aggressive on fiber smart. we want to hear more monetization of youtube. but the stock's had a run. it's had a good run. my travel trust owns it and still like it, but it's had a run. i think it's a deserved run. the stocks have run into the quarter have not done that well so far. and stocks that have been like a buffalo wild wings going down in the quarter. i mean, look, we can use the apple example. apple did run very heavily in the quarter. what? >> groupon is down 16%. >> i have groupon on tonight. >> are you kidding me? >> no. >> you have them on tonight? >> i have them on tonight. >> who's the ceo? >> they made a deal called
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living social at one point valued at $5 billion. rich williams will come on and talk about the value of that. and frank slootman service now on that list, that fabled benioff list, can i tell you is not going to happen, the stock by the way is up nine because it guided up dramatically. it is really a very, very exciting company. >> people don't like this deal to buy living social though. >> well, the actual quarter had problems, groupon. >> yeah. maybe that's what it is. >> yes. >> groupon's market cap of 3 is half of what google offered a long time ago, remember that? >> yelp -- i mean, i think when we look at the cash position groupon is pretty great. when you look at they're pulling back from some markets that were terrible, that makes sense. they were a little cryptic about what living social will do for them, but let's hear what they have to say because i think that the fact that they're talking is
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to some degree let's say different posture. how about that? >> with all that dow's up 20. let's get to bob pisani this morning. hey, bob. >> good morning, carl. a lot going on right now, i just want to hit the markets briefly here. we're modestly on the upside, but we have two serious problems the market is dealing with. number one is oil. remember, traders believe the new trading range for oil for certainly 2017 is $50 to $60, not $40 to $50. but we've been below $50 for a number of days and starting to impact the markets, particularly the oil market. look at the oil and gas exploration etf, we've essentially been trending downward now throughout the month of october because people have smelled oil's tough to get over the $50 to $60 area right now. that's problem number one. number two is interest rates. we've got ten-year yields highest level since june. this has been a phenomenon for a couple of months already, but the move up there puts pressures on interest rate sensitive stocks. so just in the month of october you see the big names.
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you see your telecoms, real estate investment trust, even utilities down a little bit, again under pressure today. there's your two big stories. oil under 50, interest rates moving up affecting the market. biggest earnings days of the year today of the quarter we're over 50%, three big names i want to highlight, too many to go through but three big names, western digital, that sandisk deal all looking very good overall here. good numbers, 14 cents above estimates. revenue's better than expected. demand for hard drives strong, flash base products strong, great quarter overall. cloud doing well. mobile doing well right across the board. texas instruments, again, nice beat for them. revenues well above forecast. that's important. chipmaker strong current quarter earnings commentary that stock moving up. texas instruments right near the highest levels since 2000 right now. brist bristol-myers, remember they had a terrible quarter last time. guidance was poor, stock dropped big. this time numbers were better, they beat the forecast, they raised their full year guidance
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overall for bristol-myers. so bottom line earnings better than expected. bigger beats from the companies that expected overall. want to talk about the biggest ipo of the year and that's zto express. very impressive numbers $16.50 to $18.50, take a look right here. and $19.50 is where we priced at. right now the indications are $20 to $22. this is a chinese delivery service. they're the number two service in china here. a lot of people have asked me why is there so much interest in this company. look at the crowds of people that are right here behind me. it's very simple, this is access to the chinese consumer. this is access to e-commerce business in china. biggest delivery market in the world in china. 20.7 billion parcels were delivered in china last year, how big is that? it's 1.5 times the size of the parcel business in the united states. so this huge potential. you tie to the e-commerce growth and you're tied to consumer
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growth, and that's why people are so interested. and that's why people are paying up to get access to this. again, $20 to $22 with indications right now that a huge crowd here will be on this all throughout the morning. be back to you as soon as it opens. guys, back to you. >> bob, thank you very much. bob pisani. we are doechbtly watching the ten-year today. 1.84 highest almost back to memorial day. rick santelli at the cme. hey, rick. >> carl, you're watching the right things, pal. that along with the cubs and you'll be on the right track. highest yields since the 31st of may for tens. but let's start at the beginning. let's look at two-year note yields hovering at the highest level since early june. but it really is a curve steepening effect. consider we're at 88, we settle at 82 on friday. now, look at one-week of tens the way they've popped. you know where they settled friday? at 1.74. so we're pretty close to ten basis points higher. if you open the chart up there's your may 31st on tens. keep remind the whole curve on the long end we settle at 2.48 friday, we're 11 basis points
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higher in a 30-year as it's ready to cross over into the 2.60 area. look at bunds for one week. you know where they settled friday? a goose egg, unchanged. they're hovering at 14, 15 basis points. if you look at a one-week of gilts, they've also risen flirting with a day we'll always use as a benchmark, 6.23, brexit day. and dollar index, yeah, tsit's stalled a bit today. only up a little bit and flirting with the unchanged line for the last four hours. but you see that one spike on that one-week chart where we traded over 99. how important is that? we talked about the 1.90s and tens in testing 100. third knock on the door on the dollar index year-to-date chart shows just how significant all this is going to be. carl, it's all yours. >> rick, we'll see you in a bit. rick santelli. when we come back, a new episode of our binge series, you'll hear what legendary documentary maker ken burns said about working
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with another legend, that would be steve jobs. and then sara eisen's in cincinnati with a cnbc exclusive. sara. >> good morning from cinci, carl, p&g stock up about 14% since david taylor took over as ceo one year ago today, this week, he is speaking out for a very first time in a cnbc exclusive about the marked improvement in the business and the challenges that remain on the global economy in the portfolio and with the competition. that's all coming up in the next hour of "squawk on the street." romantic moments can happen spontaneously,
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ken burns is best known for his award winning documentaries like the civil war, roosevelts and baseball. but he's also known now for his famous technique of zooming in on old photos dubbed the ken burns effect on a mac. you can find that on virtually every mac computer and it's all thanks to a conversation between burns and the late steve jobs. this is what burns told us in the latest episode of "binge."
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>> steve jobs called me up in december of 2002 and he said would you come and visit me, that was me knocking at the door the next moment. and he said that they'd been working on this thing, they were perfecting this sort of abbreviated superficial version of what i do with old photographs. i said that's cool. he said every mac computer in january 2003 is going to have it from now on end. we want to call it the ken burns effect. i said i don't do commercial endorsements. and he looked at me, and it was really a great moment, he said come on. i said, no, no, i don't do commercial endorsements. he said come with me. we went back to his office. and when i left, i took from him a promise to give several hundred thousand dollars in software and hardware, which i gave away to nonprofits, in exchange for keeping the name. and the world is divided between people who've said you idiot, you should have asked him, you know, for a fraction of a cent every time it was used. i said he would have then called it the pan and zoom effect.
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>> that's 2002 and already jobs was aware that people were going to want to edit their videos in ways that made it look cool, like a real documentary. >> i had avid on recently, and the model in this for avid was just rectified. by steve jobs. >> yes. >> sort of the professional tool for assembling video. >> yep. there you go, this goes away because of this. now of course there's been zero innovation since. >> right. we forgot that. >> the cash word dwindled down to $250 billion, where is it now? >> $237. >> they can buy all the nfl teams, nhl teams, major league baseball teams but then only have $187 billion leftover, david. >> sure. >> you can find our full interview streaming now on apple tv, youtube and cnbc.com/binge. we'll get stop trading with jim in a moment. dow's up 16.
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now that fedex has helped us simplify our e-commerce, we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything.
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thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce. and the returns i get out are i'vemeasured in reps,n this game huddles,bright lights, competition and games played. at td ameritrade we believe the best investments are the ones that matter most to you.
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time for cramer and stop trading. >> there's some great tech stocks all over the board today, vm ware is very good, f5, but i want to point out western digital acquisition recently of
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sandisk, they are pretty much sold out of flash, disk drives doing much better. they're calling a bottom in pcs definitely and it's not to be overlooked. this is a company that's really bettered itself. i'm very impressed with what management has done. and i think that the stock remains very cheap even after the rally today. western digital, remember them? >> i do. i do. >> an acquisition they did a very smart thing, and the conference call was probably one of the most bullish calls of the quarter. really just talking about a lot of flash selling. there should be a little takeaway to micron too. micron i thought had a good quarter but caught up in a bad day. generally positive tech story. >> you think the chip strength is about more than m&a and supply chain management? >> yes. i think you have to start -- this is internet of things again, but what you're looking at is a company that was just disk drive company. disk drives got rationalized, meaning they stopped building a lot of plants, stopped opening a lot of flash plants and this is
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what happens. supply goes into equal -- equilibrium and that's why the stock can run here. >> quickly, bank highs, jpm closing in on 70 again. >> you tweeted about the bank, interest rates. boy, if they don't raise rates, this group is going to just cut your heart out again. but citi crossing 50 i think is pretty monumental. i really have to point out those quarters were good, now they were aided by brexit, but were going to be aided by all these deals, aided by nxpi, qualcomm, time warner, att, aided by what's behind us. >> morgan stanley up over 1% this morning. and actually positive for the year on that point. >> there you go. makes sense. this was a large group, the largest group. and i think people should be excited about that and technology's better. so there's a lot to like. people feel very looney. >> groupon tonight. >> yeah, one down 16% groupon
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and one that's up 12%, which is frank slootman from service now who by the way is hilariously understated. say have to beat and raise, beat and raise, he had accelerated revenue growth, which is very hard. he's not selling out to marc benioff any time soon. very earnest private company. >> right. >> today's a very hard day. you feel very insecure because you're really trying to play catchup all day. >> there's a lot. there's a lot today, jim, we'll see you tonight. when we come back exclusive with qualcomm's steve mollenkopf on this nxpi deal. dow up 24, back in just a moment.
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♪ welcome back to "squawk on the street," i'm carl quintanilla along with david faber at post nine of the new york stock exchange. sara's in cincinnati and will join us shortly. in the meantime dow up about 29 points. big hour ahead beginning with an exclusive with the ceo of qualcomm on the heels of buying nxp semiconductors in the biggest chip deal of all time
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and first-ever interview since becoming ceo a year ago, sara eisen talks with p&g ceo david taylor. announcing plans to cut 9% of global workforce, barclays and deutsche beating estimates, ceo john cryan promising to step up restructuring efforts. and tesla reporting beat on top and bottom line and also reporting record sales. a lot to get to, guys. i think, david, we'll start with talking some qualcomm, too. >> let's do that then. let's get right to it. of course, carl, as you know qualcomm this morning announcing it will acquire nxp semiconductors, the price tag $110 a share equates about $38 billion in equity value, throw in some debt you get to $47 billion, enterprise value of that is the largest single deal that's ever been done in the semiconductor industry, or the chip industry. joining me now in exclusive interview is steve mollenkopf, ceo of qualcomm. thank you for being here. >> happy to be here. >> on this very busy day.
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>> it is. >> your shareholders have been pleased with the prospect of this deal previous to its announcement and are pleased yet again today. for any number of reasons. on the call you mentioned in terms of the future, and i thought it was interesting that the car and the internet of things will be similar to what the handset devices were in the '90s. that's a big statement, but tell me what you're talking about. >> sure. if you look at this deal, there's a lot here to be excited about in the near-term. we did use offshore cash as accretive, lot of good returns near term and long term. but if you look at the larger context of what's happening in the industry, the car and the internet of things, the technology road map and the amount of technology and technological change is going to occur in both those industry, it reminds me of what the smartphone looked like in 2000, before there was a smartphone. everyone was trying to figure out how do you assemble all of the assets, the technology breadth to be successful in that
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huge transition. that same thing's going to happen in automotive. we're happy to have the big pieces to drive it. >> we've seen a number of deals aimed at that as well. soft bank's acquisition holdings. tell me about your expectations for how quickly things are going to evolve, whether it's the internet of things and therefore chips being in virtually everything spewing out data, and autonomous driving, which i personally have a great interest in as so many other people do. are they coming quickly? >> i think they are going to come quickly. i think in our job as an enabler is to make it easy for industrys that are not used to using that much complexity, make it easy for them to get on to the internet, easy to take advantage of computing, easy to take advantage of all of the sensor data. that's what we do as a company, we do that at scale. >> last week the internet of things came up for a bad reason in that a lot of these connected devices which are essentially dumb and have easy passwords suddenly were used to direct a direct service attack on a lot of internet providers or the
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backbone to a certain extent, security. it's a key area of interest i would think in the internet of things. are you guys going to help with that? or is that a huge challenge? >> well, i think he who can solve that will do a good job. it ends up with nxp's portfolio they are the leader in security. they secure banking systems, they secure your nfc that's on your phones and smart cards. we feel like we're getting a really strong asset to be able to drive security into the internet of things. >> let's talk a bit about the financial ramifications of the deal. you mentioned the use of overseas cash of course which you had a lot of, you'll be borrowing overseas as well. you keep saying it's going to be very accretive, but, steve, you're not telling us exactly what. i've talked to some investors this morning trying to do the math and saying it could be as much as 30% accretive to your earnings. is that true? >> well, we think it's going to be significantly accretive. and it's going to be accretive right away. so other than that i think we haven't talked about a whole lot. >> why not? >> well, i think it's at this
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point i think it's better just to be prudent and talk about the strategic rationale. but it's an attractive deal financially. >> you're talking about only $500 million in cost synergies. again, i've spoken to some investors this morning who feel like that is also being, i guess in your words, prudent, perhaps but a low target. >> well, i think we have a track record of saying something and doing what we say we're going to do. and it's no different here in the case of a big acquisition like this. we feel there's a lot of value for our shareholders in the combination. >> i would imagine. and they seem to agree. nxp shareholders though some of them seem at least a bit disappointed $110 share in cash. this is structured as tender offer, of course a dutch company, you'll need at least 80% of those shares to be tendered to close the tender. are you confident you can get it? some of them telling me, you know, we would have liked some stock, we would like to participate in the combination you're talking about, and others simply saying this value is not enough. what do you say? >> well, i think we've looked at this and both companies have looked at this a number of different ways. look at it from the ratios, any
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perspective, i think it's a fair deal for both shareholders and obviously both boards have looked at it and concluded the same. >> yeah, well, give me a little more specifics on that. when you talk about multiples, you talk about premium over uneffected stock price, why do you make that argument? because it would seem to me you're going to have to make it to win the day with those shareholders. >> well, i think if you look at those ratios you don't see anything unusual. it's kind of middle of the road. i think what you tend to see is people are excited about what's going to happen in the future in terms of these technologies. and they probably have a view of what's going to happen. i think together we have an opportunity to probably realize that better than apart. and i think that's the reason for the combination. >> integration's always the key thing. this is the largest deal you've ever done. are you confident that you can do what you need to make sure you actually bring to bear the things you're talking about? >> i am. we have a tremendous team coming over as part of nxp. we have our own experience with dealing with these type of issues. i don't think anyone's done a deal this large as well. you have to acknowledge that. but i think we'll plan it out, we're doing a lot of that work right now.
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we'll share those details as they emerge, but i think it's -- the thing you remember is we have tremendous operational expertise comie ining as part os deal and we're going to see the combined company have senior executives from both sides. >> we all know about qualcomm's dominance to a certain extent in providing chips into the handset. so give me some sense as what your expectations are for the future of this combined company in terms of the things you'll be providing chips for and the growth opportunities it provides? >> well, i think in the car it's longer designing cycles, but the complexity of the car is increasing dramatically. autonomous car is the first version where people are saying i'm seeing the technology road map for global come into the car. but it's happening in every subsystem, nxp has a subsystem with security to allow that to occur in a very secure and robust way. their sales channel from the internet of things we go from roughly 100 customers to having
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30,000 customer reach. so it's a tremendous opportunity to drive the technology transitions that are going to occur over the next decade. >> regulatory review's going to take some time. are you confident you're going to get it through? why is it going to take over a year? >> well, i don't think it's anything unusual in the regulatory side. it's a complimentary combination. it just takes time to get through those things. we gave, you know, the view of a year. but i don't think there's anything unusual in the process. but of course you have to go through the process. >> right. and finally i'll come back to that accretion. number one tell us what it may be beyond significant. >> well, i'm sure it's coming, but i think it's -- i think people are going to be happy with the way the deal looks financially. >> well, they're happy so far of course given the move in your stock price which occurred prior to and even better with the announcement. we appreciate your willingness to be here on site at the nyse. thank you. >> thank you, david. >> steve mollenkopf, ceo of qualcomm. back to you. >> david, thanks a lot. as we said at the top of the hour a lot of earnings out, in fact single busiest day of
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earnings season. twitter not the largest market cap perhaps but certainly gets the lion's share of attention. kayla, you interviewed dorsey a few days ago and having talked about these numbers all morning long, mau up 1.7 on quarter, dau up 7, but not a lot of further commentary on m&a or whether or not the product is going to be more revolutionary than it already is. >> and no comment about what those daus actually are whereas facebook and even snapchat to a certain extent break out what their daily active user figure is. twitter would only say up 7%. a lot of questions for this company a few days ago when i spoke with dorsey still a few questions remaining, but the kbaen did try to answer some of them on the call this morning focusing a good bit on expectations for gap profitability next year in 2017, about the live streaming strategy, carl, which they said is doing extremely well. but the big question was about the future of the company and whether it would pursue a merger or acquisition.
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here's what jack dorsey told investors this morning. >> before i talk about our results in strategy, i want to address the recent market speculation quickly by saying our board is committed to maximizing long term shareholder value. i don't plan to comment any further on this topic. >> so starting the call, carl, by shooing the elephant out of the room. they did get asked about nfl revenues. they said that because only about 20% of the package has actually taken place that the revenue bump has been small, but perhaps more noticeable as the season goes on. they said they're focusing on the core business. they think it's unique. they think there's a good value proposition there. but they're going to be a leaner company of course 9% of the workforce will be notified today of potential layoffs. and we will see whether that gives the company more fire power to operate. >> yeah. was it $25 stock, of course 21 days ago as everybody knows now in the mid 17s. i was interested in their comments about the enhanced timeline.
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there was a lot of controversy when they started algorithmizing the timeline, used to be a raw feed of who you followed. now machines help you get access to various tweets. they say that's increasing retention, but whether or not that moves maus in a big way is a stretch. >> a lot of people were up in arms before that change happened, but you haven't really heard that much about it since that time. you know, people would also say that maybe the timeline hasn't done enough to change. it looks too similar to the way it looked a few years ago even despite the products that they have added to it. so we'll see what the company does from here. >> yep. also fourth quarter will have more nfl games than the third quarter did, obviously. then there's p&g. sara's out in cincinnati with a look at what's coming up talking to david taylor, sara. >> carl, that's right. p&g has gone through some tremendous changes lately from more than 200 brands in its portfolio to about 65 today. coming up, we'll talk to the ceo david taylor about some of those
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changes, his growth outlook and of course the challenges that lie ahead including for the industry and the global economy on "squawk on the street." what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods?
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the value of capital is to create, not just wealth, but things that matter. morgan stanley
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proposition 61 is a very, very it is time for theward. pharmaceutical industry to stop the entire nation is looking at pharmacepacalifornia.ry. e... let's go forward together. thank you all very much. welcome back to "squawk on the street," i'm sara eisen live today in cincinnati, hometown of proctor & gamble. since david taylor took over as ceo about a year ago, the company has bounced back from years of slumping sales.
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recently this quarter just this week reporting 3% organic growth, the best in years. but overall flat sales point to a difficult environment for the industry and the economy. so i started off by asking taylor where he is in this turnaround. >> i think we're making good progress, and progress will be measured in years, not quarters. so i really want to make sure all of us stay focused on making sure this year is better than last year, next year's better than this year. and to do that we've got everybody understanding that ultimately it's about winning the consumer value equation, it's working with our customers and working very hard to create and build categories as the key driver of growth. because if we do that, it's a very sustainable strategy. >> because there is this conception with the industry right now that there's a certain amount of category growth. and you and kimberly and unilever and all the other competitors are fighting for that and it's going to come down to pricing.
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>> no. i believe very much that it will come down ultimately to innovation that builds categories. if we do our job better than others, we'll get a little bit of share growth. but i don't at all subscribe to the zero sum game that says it's only about whether we can take from someone else. >> so you don't see a price car coming? >> no, i see a very different way. i think there's an opportunity for innovation to grow the category. now, there's macrmacroeconomic impacts that may cause it to be difficult in certain countries in certain categories, without question. >> is that why your outlook was so cautious? some were surprised to see the 2% organic growth forecast for the year after the quarter you just had in the first quarter. >> the first quarter was a strong step, but we also have more difficult comps that many people have highlighted. and we're very mindful of a lot of things are happening in the world. but my interest is not to get overly focused at trying to predict the future, get extremely focused at trying to make sure we show up in each market on each brand in a very
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competitive way. >> i wanted to talk to you about innovation because it's a theme and it is core to what proctor & gamble does. it's been a long time though since you had a big hit, a sw swiffer or a febreze or a tide pod, what do you have in the pipeline? >> i can't mention, but i mentioned one earlier, scent beads, innovation is our blood, but tide pods when it came out was relatively small, today it's over $1 billion. scent beads, hundreds of millions of dollars and growing rapidly, almost 20% a year for several years. >> it's been tough time for macroeconomic environment. >> that it has. >> strong dollar certainly not helping. >> yes. the headwind now how much it is i can't predict. we had four really difficult years where we had almost $1 billion and in some years over $1 billion impact in after tax
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earnings. this year i think it's going to be less than that. >> would you hope that the federal reserve holds off in raising interest rates and waits for the rest of the world because of the strength of the dollar? >> certainly. i would be happy if the dollar did not strengthen, it puts a much more level playing field for us versus competitors that are domicile in other currencies. and i know the decisions have to be made looking at the broad economy, but certainly through proctor & gamble's eyes a more level playing field helps. >> what is your sense of the u.s. economy through your lens and the u.s. consumer and whether we are ready for a rate hike? >> last year, last 12 months, last six months, last three months look at neilsen around 1 or 2 plus or minus a few points in past three-month basis. so it's pretty flat. but i like it to be a little faster? yes, is it headed down fast? no, it's pretty stable right now. >> why not? what's holding the consumer back? >> i think there's a lot of things. there's concerns, uncertainty, the economy is growing but not growing fast or slow. i think we're in a relatively
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flat period of time right now. and some stimulus hopefully will drive a little bit better growth, but right now what i'm seeing in experienced in the ten categories we do business is a relatively consistent modest growth u.s. >> china's looked a little bit better. tough year last year. >> yes, yes. >> what do you see there going forward? >> china's interesting because in many ways there's a lot of press written about china slowing down dramatically, and a lot of that is because the monitored channels have slowed down. but the non-monitored channels are going very fast. the shift though has moved from offline to online in many categories where you'll see 10, 20, 30% of a category now online. and that is not monitored. and it's growing very fast. and the monitored channels you're seeing some real slowdown. >> what's the most important priority for you in this political election? >> that it get done. >> but is there a policy issue that matters most to you here? >> there's many things, tax and trade matter to me. i think free trade is important
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for any company to have access to other markets. and a tax code that allows us to compete effectively with many of our foreign domicile competitors. >> which candidate's tax code would you say does that? >> i won't take any positions on the candidates right now during the both the primary season and the recent debates. neither candidate has had a lot of positive to say. but we'll see what happens after the election. i trust that whoever's in office and our government will try to do what's right for the country. and what's right for the country to me is to create an environment where we have a healthy economy. >> clearly the election is front and center here, carl. of course swing county, hamilton county anchored by cincinnati in a swing state that is leaning toward donald trump. we're going to speak with the mayor of cincinnati, mayor cranley coming up, he just arrived, about what issues
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matter most, trade, manufacturing certainly at the top of the list. >> hey, sara, of all the topics you covered, i would imagine forex is among the most interesting as we continue to bounce around this debate of whether the dollar breaks out of this range or not. >> and the dollar's marching higher again. a headwind for proctor & gamble just at a time when it is starting to see recovery in its core business. it saw growth in all of its major categories and yet the strong dollar still shaving a few percentage points off of that growth. he said though very clearly in that comment that it's not going to be as big of a headwind as it has been this year. we'll see what happens with the federal reserve. it certainly sounded like he does not want the fed raising interest rate here, especially at a time with other central banks going the other way and easing because that results in a stronger dollar. i can't think of a company that is more impacted by the strong dollar than p&g, which is the largest household products and personal care company in the entire world, does business in nearly every single country.
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and that's why it was really interesting to hear about some of the changes also in the product categories, what's doing well and what's not. turns out oral b toothbrushes, guys, power toothbrushes one of the strongest sellers. adult diapers doing very well, but some of the beauty brands like olay for instance are struggling, we talked about that as well. >> that's been a long, long struggle for that company for sure. good stiff, sara. we can't wait for more. sara eisen in cincinnati. >> see you in a bit. when we come back we're keeping an eye on the biggest ipo of the year, zto express. when it does open we'll bring it to you as soon as that happens. meanwhile u.p.s. with earnings today, daily deliveries getting a nearly 6% boost driven by e-commerce and we'll talk to cfo richard peretz in a moment.
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u.p.s. announcing this morning it has ordered 14 new boeing cargo planes with an option for additional 14. company also reporting quarterly earnings which did meet street expectations. issued a fairly bullish forecast for the coming peak holiday shipping season. joining us first on cnbc is u.p.s. cfo richard peretz.
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good to have you back, good morning. >> good morning. glad to be here. >> the narrative sort of spun out of the call was consumer looks okay, industrial production maybe not so okay. can you elaborate on that? >> sure. you know, when you think about the whole year what we really have seen is at the beginning of the year we had some pretty lofty growth goals and forecasts around gdp and even what was going to be happening not only in the u.s. but around the world. the global numbers have come down a little bit, but what we really see is the forecast of gdp in the u.s. has come down quite a bit. it's something we've seen quarter over quarter continue to slide down. so we know externally we're seeing that in some of the demand side, but fortunately the consumer is making up for that. you know, when you think about our different segments, we're seeing a positive result in the ground u.s. domestic business, but there are some challenges because of that softness in our supply chain in freight area. but we're managing by targeting
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a smaller customer, someone who uses us for the first time. and we're managing through it. and that's why we feel very comfortable that not only will we have a good fourth quarter but another great peak season. >> i was going to say, we know how fraught sometimes the fourth quarter is in terms of dealing with demand. i think you guys are looking for peak volume this time once again, right? >> we are. we're actually expecting over 700 million packages from thanksgiving day to the end of the year. one of the things about the calendar in 2016 is there's an additional two workdays from thanksgiving through the end of the year. so that's going to obviously smooth volume out. but we also know that the demand has increased. and we'll see over 60% of those days having over 30 million packages. just a few years ago we might have had two or three days over 30 million, but we're prepared. we've been spending the entire year making sure that we can make the necessary adjustments, collaborating with our customers and ensuring we're going to deliver a great christmas season
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for everybody around the world. >> i'd love to talk about this plane order. this is a big one. this is the 7478, which sounds like it's going to be a lot about international volume and allows you to bring some other 747s home. talk about the strategy behind that. >> sure. so the first thing that i think is important to remember is since 2013 we have not brought any additional planes into our network, which means from 1989 to 2013 we increased planes every year. what we started doing is making the necessary adjustments because you saw demand around the world change. but what we've seen over the last three years is we've increased our air volume in both the international and domestic by about 15%. so it's time. you know, we're great stewards of return on invested capital and because of that we're able to make the necessary adjustments. so now as you see the volume continue to grow, we know it's time to bring additional aircraft in. we'll cascade down and bring new
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aircraft to the international because these aircraft are so efficient operationally and they fly more miles internationally. and then we'll bring other aircraft back into the u.s. to meet the demands that we see here in the u.s. as well. >> you're joining us on a day where zto express is going public literally just feet from me. we're waiting for the opening trade. is that -- how much of a competitive threat is that? what does it say about the growth of e-commerce in china? >> you know, china's an important market for u.p.s. we actually had our own wholly owned entity there for about just over ten years. and we continue to see that grow. their business is much more domestic, but our business continues to grow internationally not only to the u.s. and to europe, but also in the region as well. you know, i can remember not that many years ago it seems like when we were on the floor going public as well. and it's a very exciting time. but the best thing about u.p.s.
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is our business changed dramatically, demand for our businesses changed dramatically in the time since we went public, i guess over 16 years ago. >> has the relationship with amazon evolved over time here? are we going to see any hallmarks of that this peak season? >> you know, amazon as well as many other retailers are continuing to grow their online businesses. and it's a relationship that we both look at as beneficial. we meet with all of our customers to ensure we can handle their demand, but also to understand what needs they have and how to make the necessary adjustments. that all being said, the value of the u.p.s. network really is the shared economies that all customers see as we deliver multiple packages. you know, earlier today we actually talked about something called share post redirects, and because of the ability to manage all the different customers, about a third of the volume that would normally go to the post
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office for a product called share post and now we actually deliver that ourselves. and that's because the economics makes sense. so it's not just about amazon, it's about all of our customers and growing demand for online shipments whether it's through the air or through omni channel, we're ready to help provide those solutions. >> how appropriate to have you be talking about volumes while we're watching this opening trade of another company, but we appreciate your time as always, richard, thank you. richard peretz, cfo of u.p.s. >> thank you. >> you see zto, david, i know you've been watching the opening price on this one. >> it was 15 times oversubscribed, carl, and yet you're watching that. that is a rarity to see them misprice something. that's what we're talking about with the underwriters with a 7 cent decline from the opening price to the open trade here call it where it opened roughly in 18.40 or below that. made one call at least.
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maybe expecting some demand from chinese retail investors that didn't come in. it would appear they got aggressive in terms of pricing valuation. >> bob, your thoughts on this? >> i agree with david. this was a very tough one to price because it was global demand. this is a very well known brand name in china. it was the biggest ipo of the year, 1.3, 1.4 billion offering. so the trick was there was obvious demand here because people were interested in getting access to the chinese consumer, interested in getting access to the e-commerce market. it's been very difficult to access that if you're an american investor. on the other hand you have to figure out what kind of demand there might be in china. so they priced it aggressively. that's the bottom line. 16.50 to 18.50 was the price talk. they priced it at 19.50, you might think what's a buck here and there, but with a 1.3 billion offering that's a fairly significant boost to the upside. early indications were over $20.
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remember, this is a giant poker game is the way this evolves in the morning. they're selling, morgan stanley the lead underwriter, is selling the shares to the public. they're trying to figure out the demands in china, demands here in the united states and people are putting in bids and offers trying to figure out exactly how much they want to pay for it. so the bottom line here is looks like slightly aggressive on the pricing overall, but still at 18.40 that would have been the price they would have priced at the top end of the range. that was 18.50 was the price talk. overall the important thing here is we got another company more access to the chinese consumer and more access to the e-commerce market and that's what people were looking for down here on the floor for sure, guys. >> bob, we'll come back to you on this one in a moment. in the meantime, let's get over to sue herera. get a quick news update at this hour. good morning, sue. >> good morning, carl. and here's the news update, everybody. we rarely hear from supreme court justice clarence thomas, but in an interview celebrating his 25th year on the court, the typically quiet judge used that moment to weigh-in on washington's political climate.
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>> this city's broken in some ways rather than confront the disagreements and the differences of opinion we'll just simply annihilate the person who disagrees with me. an evening ride home turned chaotic for commuters on one of boston's t trains, passengers had to kick out windows to escape as cars filled with smoke after the engine overheated and caught fire. flames from an overnight new york city apartment fire has killed one person, injuring 12 others including eight firefighters. the blaze took nearly five hours to get under control. and a pair of strong aftershocks from an august earthquake rocked italy. cameras caught the 15th century church being reduced basically to rubble. that is the news update this hour. david, i'm going to send it back to you. >> all right. and i will take it. thank you, sue herera. when we return, your money, your
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vote. our sara eisen is in swing state ohio, her home state of course. that's less than two weeks until the election. she's going to speak with the mayor of cincinnati, john cranley, next. these goofy glasses. yeah. well, we gotta hand it to fedex. they've helped make our e-commerce so easy, and now we're getting all kinds of new customers. i know. can you believe we're getting orders from canada, ireland... this one's going to new zealand. new zealand?
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twitter reported earnings this morning. they beat the street, announced plans to cut 9% of their global workforce. our julia boorstin has more this morning. hey, julia. >> hey, carl. well, jack dorsey kicked off the earnings call by saying he wouldn't comment on the m&a rumors that have sent twitter shares seesawing, this after talks with salesforce fell through. dorsey focused his answers on the call on the company's acceleration of daily active users, attributing that trend improvements to twitter's timeline as well as more useful notifications. >> we're focused on building the most useful, open and comprehensive news network on the planet. this is the fastest way to see what's happening.
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our product is already revolutionary. and we're focused on improving it every single day. we've been making hundreds of small changes as quickly as we can that will continue to compound in more usage. >> dorsey also talked about the decision to layoff 9% of the company's staff, that's about 350 employees around the world. he stressed it's not an across the board cut but rather focused on non-core elements such as going from three to two sales teams. >> we're getting more disciplined about how we invest in the business. we fully funded our most critical initiatives, we set a goal of driving towards gap profitability in 2017 as we de-prioritize certain initiatives and simplify how we operate. as part of this we decided to reduce the size of our organization by 9%, mostly concentrated in sales, partnerships and marketing. >> twitter's live stream of thursday night football games came up a number of times on the
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call. cfo anthony nodo saying viewership has been growing over the course of the game and exceeded expectations. he also said the company's just scratched the surface in terms of personalizing that live experience. we'll have to see if all of this focus on live and content will be enough to really drive significant user growth. carl, back over to you. >> julia, thanks so much. let get over to sara eisen in cincinnati with another special guest. hey, sara. >> hi, carl. here in my hometown of cincinnati with mayor john cranley, good to see you. >> it's great to be here. >> a democratic mayor in a swing county in a swing state, the latest polls real clear politics has ohio leaning for trump by one percentage point. that's come down. what do you see for hamilton county? >> oh, we're going to be for hillary. i mean, cincinnati is an international cosmopolitan city with headquarters like proctor & gamble that you just heard from. and people are turned off by trump's rhetoric on women. they're turned off by his
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business policies, and they know based on the bill clinton years and the hillary clinton investment in infrastructure, balanced budgets, those things and frankly a message of inclusion is going to do really well here at cincinnati, which is a very diverse city. >> the county did go for president obama during both of his elections, but also president bush. >> yes. >> both times before that. there's also a lot of economic uncertainty. >> yes. >> and worries here especially when it comes to low wages. unemployment has been down, but areas like services and health care have been growing lower paying jobs. has that manifest itself in the support for trump? >> well, i think in cincinnati it's the opposite, which is that's what's leading people to support hillary. you know, people want to see a lift in the minimum wage. hillary has called for that. donald trump has said people are paid too much. and the minimum wage is too high. so that message does not work here in cincinnati. >> what about the message of renegotiating our trade
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relationships? ohio is a big manufacturing state, and i mention those household medium incomes which are rising but way below the u.s. average. >> well, i certainly think that the trade issue is a bigger issue for ohio, especially northern ohio. and everybody wants fair trade. but in cincinnati, hamilton county as proctor & gamble is headquartered here, which is a very pro-trade environment, the business community which i talk to which generally lean republican are leaning privately towards hillary because they know she's not going to rip up international deals and that she's going to be fair. now, she may be pushing for fairer deals, which i think she should do, but they'll do it in a diplomatic way and a reasonable way and not to jeopardize u.s. business interests that are, you know, represented here by proctor & gamble and so many other great companies. >> and we should say that you hosted secretary clinton a few months ago at your homecincinna. a lot of money coming from the city going to her campaign? >> yeah. i think cincinnati is the largest financial supporters of hillary in the state of ohio.
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i'm proud to be co-host of the fund raising effort here. i'm a big supporter of bill and hillary clinton and i think they're going to do a great job for our country. >> what kind of turnout are you seeing in early voting? >> it's up. we're seeing a big surge among democratic voters, which we think is a good sign because there's been questions about whether after eight years whether we'll still have the enthusiasm. i think that donald trump is doing a lot for our enthusiasm. >> should we be worried about hacking on election day? >> no. i think we're -- you know, i think we have a pretty good system. and certainly everybody i know is making sure that we'll have a safe and fair election. >> finally, i just want to talk about cincinnati. the city has changed so much since i've lived here, a real revitalization of downtown an example, mayor cranley, of the public and private partnership when it comes to investing in a city. just tell us a little about how that came together and how fast the city is growing. >> well, you know, "forbes" magazine said cincinnati iss th
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number one place in america for college graduates. we have more headquartered here than any other american city for our size. we're seeing massive renaissance of our downtown and over the run because of the city and the partnership with proctor & gamble and western and sin tas put together a fund to buy up old buildings downtown, fix them up and create a really exciting urban core. so we have got a very exciting city that is getting national attention from "forbes" magazine and other outlets. >> as joe kernen said earlier you're one of the good democrats. >> he had me on his show, i went to high school with his uncle bob. >> he has ties here. >> like you. >> like us. of course mayor cranley mayor of cincinnati. and i'll see you next hour on "squawk alley" because p&g they're the biggest advertiser in the world. so they're going to tell us how
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he's rethink shifting ad dollars in the world of social media and all the changes going on in the way we consume television and other media. but for now back to you. >> that's a good one. marketing spend is a big topic today. sara, thanks. as we go to break look at where stocks have trading, in the red on the dow down 17. s&p 2134. a lot more ahead on "squawk on the street." don't go away.
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according to goldman sachs there's an easy way to make money during earnings season. find out what that is and why it's working on tradingnation.cnbc.com. more "squawk on the street" coming up.
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♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ welcome back to "squawk on the street." i'm seema mody. the real estate sector extending yesterday's losses when it posted its worst day in three weeks on disappointing earnings. it's currently underperforming all s&p 500 sectors, down about 2% on the day. simon property group is one of the names weighing on the sector. it is the biggest retail reits
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which raised profit outlook on higher occupancy rates. other laggards include cbre group, digital realty and extra space all down between 4% to 5%. the sector just turning negative year-to-date, carl, down more than 1%. david, back to you. >> all right, thank you very much, seema. well, our all-america economic survey is out. steve liesman joins us with clinton versus trump on the issue of the economy. take it away, steve. >> david, thanks very much. 804 americans polled across the country, all demographics, all income groups, all races, it's all america. let's show you the overall results before we delve into the economy. 17% undecided, that's down eight from our june poll. 37 for trump, 46 for clinton. clinton has nearly doubled her lead with the undecideds, plus six for her compared to june. and trump only plus two, so a nine-point lead in a two-way race among registered voters. now, let's move on and take a look. clinton has really widened her
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lead on key economic issues. on the overall economy she was up by one in june. she's now up by five. that breaks 43-38. on trade she was up by nine, remains up by nine. so this big trade issue for trump not so big when it comes to the polls. on business regulations she's up now on the budget deficit she's up, and on the stock market she had a 16 point deficit. now she's seen as up one or call it just even with one of our pollsters, our democratic pollste pollsters, we have democrat and republican, democrat say trump is not able to capitalize on the one thing he had going for him which was as a businessman. clinton now even. now, on the issue of taxes, 43% of americans think they'll raise their taxes, 29% say trump will on the issue of deficit 49% say he'll increase, say clinton will increase the deficit just 46% of trump voters. so about even. he's been unable to capitalize on that big economic issue. back to you guys. >> thank you very much, steve liesman. all right, let's get it over now to rick santelli who joins us
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from the cme group in chicago. he's got the santelli exchange. >> thanks, david. i like to welcome my special guest today. bob, thanks for taking the time. >> you're welcome, good listen steve liesman in his survey, forget politics for a minute, you know, if you want your doctor, you can keep it, not only can't you keep your doctor, you might not be able to find any doctor. $2,500 per fam hi. it's most likely a loss of that if not more. it seems that obamacare, aka, the affordable care act, is anything but affordable. your thoughts, bob, and you've been telling us for the last two years and it seems all your numbers are coming true. >> yeah. we've insured, say, 20 million more people, most because of the medicaid expansion. obamacare has worked really well for the poorest people in this country, people who make less than 200% of the poverty level. those plans are affordable, the deductibles are low. they're signing up to the 80th
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percentile, but the plan has not worked for the middle class. even people who get subsidies are seeing deductibles now in the $3,000 to $7,000 range depending on whether you get the cheapest plan or not. most importantly, about 40% of our country makes more than 400% of ti. what that means is those that are eligible for obamacare don't get subsidies if they're over 400% of poverty. we're seeing now people have to pay the full cost of this paying $10,000 a year in premium and $7,000 in deductibles for the cheapst plans, some people paying $12,000 to $15,000 for the richer plans and still $3,000 deductibles. there's a quirk in the law that says if your health insurance costs more than 8% of your income, you're not subject to the individual mandate. i had a broker in naples, florida, e-mail me last week with a number of examples of her customers who make $150,000 or $200,000 a year where their premiums are so high they're
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exempt from the mandate. she's got people paying $20,000 in premium. >> you know, and when i hear that, that really is something else. let's dig into that. so this notion that there's 20 million more insured, i get that. i understand, and that's a good thing. but those disrupted that weren't that unhappy with the way things were, that number is extremely large as well. can you take a look at those dynamics and finish this up here, bob? >> yeah. really, obamacare is a tale of two cities. the poorest people doing very well under it, middle class, working class people, a family of four making $65,000 a year with subsidies still has to pay about $5,000 in premium, something they don't have, and they've got to face the dedoubleable of at least $3,000 per person. so we really have disrupted the marketplace for the middle class and the working class in order to get everybody covered. we've gotten rid of pre-existing conditions.
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we've taken care of poor people really well with the medicaid expansion and the big subsidies, but we're just ignoring the people in the middle class even, you know, family of four making $100,000 a year doesn't get a subsidy, that's two folks working. those are regular mainstream people and they are being disrupted and really getting hammered here. >> bob, thank you. for all those people getting disrupted, to me it sounds like it all ends up in november in the election, a lot of brexit undertones to those middle class voters. thank you. david faber, back to you. >> thank you very much, mr. santelli. yesterday our parent company, comcast, reported earnings that on the face of it look pretty good. take a look, though. this one hits close to home. another bad day for the two largest capable companies in in the country. why? it sounds strange but i've been hering the introduction from at&t of a directv streaming service 35 bucks a month for 100
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channels perhaps leading people to believe that disconnects of video service will start to increase, although frankly comcast had more video subs over the last year, some damage in that stock over the last two days. we're back after this. mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle. and it keeps my investments fully mobile... even when i'm on the move. sign up at etrade.com and get up to six hundred dollars.
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that's a wrap for us here with "squawk on the street" but the squawk franchise continues. the ceo of png. we're back after this.
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good morning. it is 8:00 a.m. at twitter headquarters in san francisco. it's 11:00 a.m. on wall street, and "squawk alley" is live. ♪ welcome to "squawk alley." henry, good morning to you.

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