tv Squawk Alley CNBC June 27, 2017 11:00am-12:01pm EDT
welcome back to "squawk on the street." i'm seema mody energy stocks are leegd the way. this as oil prices inch up ahead of the release of fresh inventory data stocks leading the charge include valero and tesoro. >> thank you very much good morning it is 8:00 a.m google headquarters out west 11:00 a.m. on wall street. and "squawk alley is live.
good tuesday morning welcome to "squawk alley." we're at the new york stock exchange joining us this morning from palo alto, co-founder roger m k mackname is google hit by this fine by unfavoring the search results over rivals? we talked to the eu's commissioner for competition earlier this morning here's what she said >> well, the fine is a reflection of the abuse and how long the abuse has taken place and, of course, the importance of the different actors in this market and we find this abuse has been taking place since 2008. but also that it has taken place
in every european country where google shopping has been ruled out. and that, of course, is a very serious matter and that is reflected in the level of the fine. >> our google, roger, would argue it is also serious although they say they respectful respectfully disagree and are considering option onz appeal. what did z. this mean? >> i think, carl, there is an interesting sest tests coming in front of us. first of all, google, facebook, amazon are increasingly just super monopolies, especially google and facebook. the share of the markets they operate in is literally on the same scale that standard oil had 100 years or more than 100 years ago with the big differences that their reach is now global, not just within a single country. i'll give you a frame of reference. facebook's monthly user count is roughly equal to the scale of christianity globally and google's is roughly the size of islam. the difference is people are
checking their smart phones 150 times a day. so they're actually people are far more engaged in these service thanksgiving they are in religion and when you by this that level of reach, obviously the opportunity to behave the way google abeing accused of behaving in europe, the temptation to do that overpowering that is the business model the reality is this fine is not large enough to change google's behavior the only thing it will change is regulation that's actually say can you or cannot do something the fines just aren't large enough to move the needle. and in the united states -- >> roger -- >> there is no prayer of regulation so europe is the only place that can happen >> roger, john fort. so it's not just this case there's also an android case forthcoming and google is acting one might argue differently than facebook or that amazon. it's hard to argue you go on google and search for a camera they show you first ads that they're going to make money off
of before they show you prominent retailers who have that item on sale. and they're trying to compare themselves to amazon saying if you search on amazon, you're getting -- it's apples and oranges, isn't it? a search engine versus a store if i'm searching for something zshgs that mean i want to give google a cut >> no. i think that's a fair point. i would make the following observation. the way that google's product works makes it their anti-competitive behavior much more obvious but do not underestimate how powerful facebook's monopoly has been to boosting instagram and what'sap and the other thing tharz doing. the ability to cross sell cross promote these products is overwhelming on a global basis the but i think your point is right on i think that, you know, google's been caught here doing something that is their business model and the challenge for the european union and i think what
should be the challenge in the united states but won't be is to ask the question of, you know, to what degree do you want monopoly's to flourish they do stifle creativity. they do stifle innovation. they stifle entrepreneurship and there's -- you can see this even in silicon valley it's very hard for any of the unicorn generation of companies to actually reach successful critical mass because, you know, one of their competitors gets acquired by google and facebook and then the category is over. i think it's a big policy question the world is going to have to deal with over the next few years. >> you say stifle innovation, roger. maybe that's true if you want to run your own company but innovation survives even if you're run by google >> that's a fair point the core question is, you know, what happens if they make a mistake? what happens if they stop being innovative the history of really large
companies, john, as we both know, is that eventually they lose their creative edge and so i think history suggests that letting 1,000 flowers bloom, having lots and lots of competitors in a marketplace trying to change things and trying to improve things over the long run works better for consumers. it works better for the economy. it works better for employment and that is my point it's just a policy question f you're a shareholder of google or facebook, these are the good ole days, right? this is -- they have their ability to do whatever they choose to do and other than in europe, there's really no one to stop them and even in europe the fine is being imposed aren't large enough to change the behavior. so shareholder of google, you're saying, hey, we won again. >> it's tiny fraction of the cash pile, roger my question is whether it's europe's responsibility. even if you're right on the claims you're making i get
they're doing business overseas. but this business of europe being extra harsh to select technology companies in the united states doesn't it just enflame transatlantic tensions at a time where we're already worried about trade rising protectionism and other types of trade warfare? >> well, sayery, i would respectfully push back on that i look at it and suggest that i think in fact what europe is doing is less than what we should be doing this country i don't think having companies with that market dominance is the american way historic lit country is always acted against monopoly and in favor of entrepreneurship. and, you know, if you look at it, new company formation in the united states peaked in the '70s in 1978. and, you know, that happens to map almost precisely to this era of deregulation, of lower tax
rates and a reduction in things like antitrust protection. and so -- >> roger -- >> i look at this and my suggestion is if you're a shareholder of google and facebook this is great you love this situation. but i think the europeans are totally entitled to have a different value system candidly, if i were they, i'd be turning up the heat and not turning it down. >> how does amazon avoid getting cooked in this same antitrust bottom i guess amazon could argue, yes, we have big business in e-commerce but in terms of commerce overall, we're still relatively small. what argument do they need to make in order to keep from being the next target in this time of inaction >> interestingly enough, i think that amazon situations is marketedly different because the strategy is different. if we look at what is going on with whole foods, it really clarifies amazon's strategy of
being effectively the supplier to the whole industries. i think they're less interested to being in the grocery business than to being the backbone of all food oriented retail restaurants, grossy and convenience stores and the like to do the same thing for that industry that they have done for technology with amazon web services and, you know, i think that amazon's strategy is going to ultimately create huge anti-trust issues. but they have a long way to go they're going to wind up aligning themselves in improving the cost structure of a lot of existing players while they do what they're doing the reality is whole foods market share and grocery is tiny i don't expect it to become suddenly, you know, bigger than the biggest grocery stores i think the more likely strategy is amazon will use it to get more successful at doing the backbone services required for the whole industry and then they'll go to
albertson's and safeway and try to provide the services. >> is your point then that anti-strust is a longer term concern or less of a concern as long as the scale that you're building is disinflationary rather than inflationary >> i think the way i look at the issue is i don't think there's any chance of there being any antitrust regulation in the united states in the foreseeable future so if you're a shareholder of the companies, i think you can literally put it in a box and not worry about it for now and, you know, i it this trends in the united states are for more deregulation, for less concern about issues like market concentration. and in europe, there is heightened concern but it's still not at a level that's slowing these guys down at all so, you know, i just look at this and go, to me if you're a shareholder, it's a cost of doing business you move on. you don't worry about it i think as a policy matter, we really should be looking at it our economy does best when
entrepreneurship flourishes. i think having this level of scale in the tech world is not going to be good for entrepreneurship in the long run. it's not -- you know, you can start a million companies. you're not going to be able to take them very far >> understood. roger, stay with us. we do want to mention one other story, it's a wave of cyber attacks around the world today the world's largest advertising agency, wpp, ukrainian government agencies are among those hit. we're watching a global story today. >> that's right, carl. looks like the cyber attacks report sod far stretch from britain to russia. they call the attacks unprecedented but saying they're able to handle it in the ukraine. let me give you a list of companies and entities that have reported the cyber attack so far. that includes ukrainian government agencies, kiev airport, british advertising agency wpp, the danish shipping company maersk, and a russian oil company reporting sib area tacks this morning the national bank of ukraine out
with a statement this morning, they say, "as a result of the cyber attacks, banks experienced difficulty in services customers and performing banking operations all the financial market participants have taken steps to tighten security measures to counteract these hacker attacks. the national bank of ukraine is confident that banking infrastructure is protected from cyber attacks" so through hear officials expressing confidence they're able to deal with this there are reports the cyber attacks include ransomware is where they hold on to the data and demand payment in order to release it no reaction so far from here at the white house or the department of homeland security. i've asked them for their comments or insights into what might be going on here but i can tell you, guys, just as a general matter, when you talk to cybersecurity experts, there is some likely suspects for activities like this you talk about hitting the ukraine, the likely suspect would often be the russian government or russian hackers.
when you talk about ransomware, lately people are talking more about north korea getting into that business. no indication yet of who it might be though, carl, in this particular case. >> yeah, i was just going to ask you whether there were any patterns this idea that it's going global, it's hitting multiple industries and companies. is that a ransomware thing >> yeah, ransomware is a fascinating trend. it doesn't work if people don't pay. but clearly people are paying. companies are paying possibly, governments are paying somebody is paying to get their data back. and that's what makes it economically worth while for the attackers to go out and hold that data. you can see a regime like a north korea that is desperate for hard dollars looking at that and saying that's for me because people are paying. the general cybersecurity procedures are always -- they always tell ceos when the company is hit, don't pay. you just encourage them again. but the temptation is so great because whatever is stolen is so
valuable to the on going operations of the country, the temptation is really to pavement we're seeing people doing that and we might be seeing that again today. we'll have to take a look. >> all right reinforcing behavior, thank you for that roger, you mentioned a moment ago the cost of doing business s this another form of that? >> absolutely. but i think the thing we really should be paying attention to as americans is this notion that cyber warfare has become far more prevalent than ground combat as an issue for our defense industry and for our, you know, for the pentagon and i don't think as a country we treat that way. i think we're still debating what happened during the election last year we've got what i would characterize in these cases as relatively low intensity
attacks, you know, going after old versions of microsoft operating systems and the like i think we have to wake up to the fact that there's a much greater threat to our national security in the cyber realm than there is in the combat realm and that re-allocating our defense budgets away, from you know, fighter jets and submarines and aircraft carriers towards having the systems that we run the country on be better defended that that would be a really good conversation to have and even good policy change to implement. >> yeah. cost one fighter jet will get you quite a bit of information >> it will get you a lot of anti-virus software. >> roger, good to talk you to. thank you for a great conversation again >> my pleasure good luck out there. >> when we come back, kroger ceo sitting down with us earlier his comments in an exclusive interview and thoughts on amazon's purchase of whole foods. but first, take a look at shares
of sprint today. the wireless service provider entering exclusive talks with charter and our parent company comcast to bolster the service capabilities sprint is up 5.5%. comcast and charter under pressure verizon weighing down the dow. (baby crying) ♪ minutes old. ♪ a baby's skin is never more delicate. ♪ what do hospitals use to wash and protect it? ♪ johnson's® the number 1 choices in hospitals.
suppliers, supermarkets all dropped on the news of amazon entering the market number one stock was hit harder than kroger, though, which dropped 9% on the day it came after weaker than expected earnings. kroger's ceo just joined us in the last hour to respond for the first time here's his reaction when we asked him what he thought when he heard that amazon is buying whole foods. >> for me, it wasn't as much of a surprise as it was for others. you know, you can tell that amazon wanted to do something from a physical assets standpoint i think whole foods is a great fit for them we're up for, you know, all challenges kroger has been in business for 134 years. we've been through many, many changes. and we really see this change as well and what we find is when we help the customer fall in love with food and we deliver it at a great value, the customers reward us with that business >> so here's how i would sum up
his defense to the whole amazon-whole foods deal. number one, we weren't that surprised. look, they had been preparing for battle with amazon for years. all of our previous interviews always had a question about amazon entering the on line food delivery business. and number two, they're always preparing to compete on price. that's how kroger led to the upswing over the last few years. they just slashed profit margins and prices to fight walmart which is doing it again in terms of lowering prices they're prepared to do so again. so from their perspective, they've been in this business for a while. they got the consumer insights they need to understand their consumer they got a growing organic and healthy business i think the question though for investors is nobody really knows what amazon and whole foods is going to look like what amazon is going to do, how it's going to use the data and warehouses and everything else and that has scared a lot of investors. whether kroger can make the case successfully or not, we will see. >> amazon should be careful. crowinger is a good company.
it's a good grocery company. they seem to be focused on customers. you don't folk ounce competitors, focus on your competitors weechlt see how much ground they can continue to take whether they can get smarter in digital and get people to download the app and get smarter in that area even as amazon is trying to catch up to them don't count the likes of kroger out. they've been battling years and walmart. >> the disclaimer you've been skeptical on amazon-whole foods since the moment it was announced. >> they might very well blow it up and change the world. but they might not it's not a sure thing with them. >> i think that's a fair point let's talk more about what amazon plans to do, how it could affect the entire retail industry senior research analyst from piper jaffray joins us are you getting any indication or sense of the amazon vision for whole foods and what it is and how worried grocers like kroger should be, mike >> we're not at this point it's still pretty early as we've
all heard. this is something that really started in the last couple months here as far as the two even getting together to talk about it so be honest, i'm not sure amazon knows what the vision s i know the winner here is consumers. we'll see more innovation in a market that hasn't had any innovation for many years. and we're going to see lower pricing. i it this consumer is a winner as far as the kroger, et cetera, i don't want to pick on kroger specifically i would just say that if you cater to the mid to high end consumer, if you're looking at expanding kind of into natural and organic foods, you're in the cross hairs of amazon. but it's not going to be a winner take all market >> which is sort of an interesting idea whole foods is much more exposed to the cities and the affluent millennials. kroger has more exposure in the rural communities. and has introduced some of the communities, i think, to organic and healthy food
we don't want to put you too much on the spot you cover amazon so what sort of clues do you think we're going to get what is the time frame of how we're going to measure the success and what amazon has planned for whole foods? >> i think what you're going to see is a kind of slow hybrid rollout. what i mean by a hybrid rollout is they're not going to start on day one and say we're shifting every consumer in america over to grocery delivery. first of all, consumers wouldn't have it. it tauz a long time to change consumer behavior. i think what we're going to see is increase in usage of click and collect or pick up using the locations that whole foods has which dramatically expands the existing fulfillment nodes that amazon has and then we're going to see a transition of the store to whole foods stores becoming a mix of both fulfillment center and a traditional retail store and eventually, you know, that click and collect and pick up service will kind of train the
consumer that can you order groceries online and you'll get a quality product and eventually that will transition to more customers being comfortable with delivery that's where amazon wants it to go >> what do you see as the dangers for amazon in this area? >> groceries on thin margins, home delivery is expensive but in a lot of areas that amazon wants to move into, a the love areas where there are not whole foods, people are not willing to pay that much how careful does amazon have to be about how it tries to rollout. how are they going to do it now? >> yeah, the answer to that is very careful it is hard as i mentioned earlier to change consumer behavior they can go into a store and pick out the items and i think that's going to be, you know, something that again will be kind of a wait and see to what degree that works.
can you go into the store and pick out your items and have amazon essentially watch what you're choosing and use computer vision and other technologies to fick that out and walk out without having to check out. those kinds of innovations are no-brainer and something that everyone's going to want to participate in but the risk is do consumers really want grocery delivery or is there something about going into the store and picking out your items that is going to be hard to break from >> good question i think it's only 5% of total grocery sales at this point, mike thank you. we'll leave it there mike olson covering amazon overweight at $1200 a share. it's day two of the martin shkreli trial. we have more on the storey meg? >> hey there it is day two of the trial. jury selection is still going on it has been a little bit of a slow process we were expecting that to be kind of the news today and then perhaps to get to opening
arguments if they were able to seat a jury of 12 and six alternates we're getting news that the defense attorney requested a mistrial this morning. citing some of the negative publicity that came out of yesterday's jury selection process. the federal judge here did reject that request for a mistrial he also had requested that media not be allowed to listen in on the sidebar conversations where the prospective juries explained why they couldn't par take in the potentially six week long trial. now a lot of those reasons were scheduling this is six weeks in the middle of the summer. but also a lot of the jurors expressing opinions negative opinions about martin shkreli coming into the courtroom. that is being cited as why they requested the mistrial, citing "the new york post" cover this morning in particular, the headline being, "jury of his jeers" saying that of all the jurors, many hate him. calling him the face of corporate greed, a snake, many other things so because the judge has rejected both of those motions,
jury selection continues they're aiming to get to 12 plus six alternates, potentially opening arguments today. we'll bring more news from inside the courthouse. back to you. >> meg, as we're talking to you, we'll watch that in a moment meanwhile, dow up is 15 points when we come back, take a listen to sails force ceo and why he thinks f.a.n.g. stocks are still undervalued. >> some of those f.a.n.g.s are still undervalued. on some of the companies, i mean, you look at aws, we work closely with amazon. they're a very large customer of ours you look at that aws business going past $20 billion this year i think tons a trajectory to go to $100 billion. when you look at that as a multiple to where amazon is today, amazon is a tremendous, emdopse for the future and jeff is doing an unbelievable job what's with the dog-sized horse?
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good morning, everyone scottish leader announcing her government will delay legislation that would have sought a second independence referendum for scotland. it focus attention on brexit. >> we'll not seek toin introduce the legislation to an independence referendum immediately. instill, we will in good faith redouble our efforts and put our shoeld torte wheel in seeking to influence the brexit talks in a way that protects scotland's interests. >> a colonel in ukraine's military was killed by a car bomb in central kiev the defense ministry is calling it a terrorist attack. a criminal investigation is underway that kata shareholders attending the meeting in tokyo demanding answers from management just a day after the company filed for bankruptcy protection here in the u.s. as well as in japan
takata is the biggest japanese manufacturer ever to go bankrupt that's the news update at this hour. back downtown now to "squawk alley. sarah, balk. >> thank you i'll send it out to seema mody with the european close. >> european stocks are moving higher -- lower, excuse me, on a day in a which central bankers are in the spotlight janet yellen will speak in 90 minutes the euro jumping 1% on the comments from mario drogy addressing a conference. he opened the door to tweaking the ecb's easy monetary policy as the economy recovers saying, "the threats of deflation is gone." a big statement there. but drogy add something support withen into to remain in place european bond yields including the german ten year jumping on the remarks from draghi.
bank ofening glan england says more cash. he says the uk financial stability strengthens since the 2008 crisis. we did see barclay's and standard charter outperform in today's trade. take a look at the spanish banks moving higher after state owned bankia agreed to buy the smaller rival in a deal valued at $924 million. the combination creating spain's fourth biggest lender comes amid struggles in the european banking sector carl, back to you. >> all right se seema, thank you very much we've been telling but sib area tacks on wpp and ukraine now merck is joining the fray. they say pe confirm our company's computer network was compromised to day as part of global hack. other organizations have also been affected. we're investigating the matter and we'll provide additional
information as we learn more aside from some of the government agencies and merck and wpp, it's a mix of government and private sector enlt thaz are victims. >> that echoes the last time we saw this ransomware attack trying to draw patterns to figure out who, which country it came from as amon said all sorts of chatter, north korea, rush yachlt. >> the big question is to what degree are these companies prepared for this sort of attack if you got your data backed up in a spot out of reach of the malware, perhaps you don't need to pat ransom. can you say forget it. shut down the system, reload the data if not and it's critical information, maybe you're in trouble. >> if they haven't done it now, then they'll be doing so >> yes >> and eu regulators have hit alphabet's going well $2.7 billion fine. anti-trust authorities say the company is abusing its dominance as a search engine we have josh in san francisco
with that story. >> specific lishgs the european commission is saying here that google is illegally favoring the shopping service in its search results. since 2004, google has been offering that service in europe. it's called google shopping and ate louz consumers to compare products and prices online the eu says google is systemically given prominent placement to its own shopping service and that is demoting rival services in its search results. eu antitrust chief was on cnbc this morning explaining how this hurts google's rivals and consumers. >> we find that google being so dominant in general internet search that if they used this dominance to promote themselves into demote rivals you find rivals in page four on average if you're on desktop but you always find the google shopping unit just in front of you where we know that most clicks will take place
that is illegal under the antitrust laws. >> the eu says google must end the conduct within 90 days if they do not comply, they could face an additional fine of 5% of total revenue for its part google is considering an appeal and rejects the charges. ken kent walker saying shows ads benefits us, our advertisers and most of all our users and we show them only when your feedback tells us they are relevant stock is down about 1% in today's trade. alphabet does boast a cash pile of $92 billion they say it's hard right now to say for sure what the exact revenue impact is because we don't know at this point how google will comply with this ec decision credit suissethinks it could mean a 1.5% hit to consolidated gross revenue. back to you. >> all right thank you, josh. for more, let's bring in victor anthony and michael graham
good morning to both of you. $2.7 billion not a lot of money for google are they looking to android and how they handled demanding that oem's preload the apps if they get in continued trouble with the eu, is that a problem >> well, no. $2.7 billion is small, as you said, small. what i'm concerned about is really if they lose the future, i guess the android to mobile side that one i think can be more disruptive to google going forward if they don't have a valid defense. i think it drags on for another several years. this is a headline risk to google the android mobile one which essentially greater than 50% of all searches is done via mobile. and so if they were to change google's business practices with android and mobile, i think that could be more disruptive to
google's cash flow position going forward. >> michael, do you look at this as a canary in the coal mine for the android case >> i'm not so sure it's going to be very material for from a revenue perspective. i think there are many ways that google is generating revenue and they do have some other growth vehicles like google maps and things that are sort of not big revenue generators now but could be in the future you know, we're a little concerned about google's overall revenue growth slowing down a little bit as we get out of this year but i don't think it's going to come from this particular issue. i do agree that impact from a cash per inspect siespective is >> what do you think of google's attempt to shift the spotlight to amazon and its response they said look at amazon this is where -- that's become the number one placepeople go to search for products and look how powerful they are. is that going to work?
>> it's 55% of all products. so they do have a valid case there. i'm not sure whether or not that will work. seems like the eu is determined to really fine google at some point in the future over this practice and try to change some business model changes for some changes over at google i think, you know, amazon is a strong competitor over google. right now i think roughly over 40% of searches on google are retail related and so it is a risk, i think, it's a risk for amazon. >> mike will, may be a bit of a stretch s there a feeling that decision is maybe related to what some call a fraying in relations between the u.s. and the eu >> i'm not sure about that you know, i think that we've seen this over the years with big tech companies in europe you know, microsoft went through a multiyear battle in europe to try to, you know, protect its business practices ultimately, the impact was fairly small so i think google will be able
to navigate. this i'm not sure it's a europe against the u.s. question as much as it is, you know, trying to protect the european consumer but i think you have to look at, you know, what serves the consumer best. is it access to, you know, great product selection at low prices? that's what you get with some of these really good search services that's what you usually get on amazon >> it's an issue we'll continue talking about. there are so many dominant tech companies globally based in the u.s. thank you, victor and michael for joining us >> thank you it's been a limited volatility today dow is in a tight range eaof ll a1:00ahd e be live monday.ll can we at least analyze customer traffic? can we push the offer online? brian, i just had a quick question. brian? brian...
we're unveiling the brand new halftime report survey and the tech fund manager that beaten 99%st field is run ago way from the fang trade. he'll give us the top new holding in an exclusive interview. aun one of wall street's top oil ruchers, a gutsy call on crude after that report after the top of the hour. we'll see new a little bit for more on today's global wave of cyber attacks, we're joined on the phone by former fbi special agent in charge of cyber, leo taddeo. leo, good morning. >> good morning. >> i'm wondering how prepared many of these firms are for a ransomware attack. they've been in the air for a while do a lot of the firms have data backed up or in a situation now where critical information is out of their reach >> well, you know, not all firms have the same level of maturity when it comes to security. and even within firms, some
departments may have better security than others so it's a mixed bag. many companies have taken over smaller companies and vice versa. and with those takeovers, you inherit the security posture of the organization you purchased and tried to merge so there's a wide variety of security, a wide variety of protections out there and so that's why we're seeing this type of tool propagate broadly because it's very difficult to depl deploy effective security across the entire organization in everywhere it needs to be. >> leo, i guess you want clients to use good e-mail hygiene and not get into the situation but if a company is in this position now where they've been hit with this kind of attack, what do you advise them to do? >> the first step is to obviously try to limit the spread of the virus from moving from one part of your organization to the ear. and if you haven't been infected yet, obviously to prevent that
infection by understanding the indicators and configuring your system to spot those indicators and cut off any access from the infected machines. once you've been infected and hit devices on your system, then the question is how important are those devices? do you have backups for the devices in for that data and can -- how long will it take you to recover if you have lost data, then there is an impact review that has to be done and recovery efforts need to be made. but again, it's not an easy process. this isn't the one size fits all problem even within organizations. they will be parts of the organization that lose data, that's ultimately not very critical but the fear for every agency is that something irreplaceable will be lost >> we're talleying the name as we get them, new ones come up every hour the latest is merck and wpp, british advertising joint, a russian oil company. is there any thread, anything
you can glean from the fact that it's seemingly random companies from various countries it does remind us of what happened with the ransomware attack in may. >> right this is the problem that u.s. government has in jevenlt tgene. the fbi and other agencies will work to attribute this attack to the persons behind it. the ransom attack didn't result in a big financial gain or the people behind the tack, given the vdiversity of the victims, it's thoord understand who the actor is based on the motive if were a financial scheme, we would understand that may be a criminal group if it were to influence our diplomatic or defense policies, quo understand that it might be a nation state but this appears to be more what
i would characterize as cyber vandalism. and it's hard to understand from that point of view who would do go through the time and effort to create this kind of impact. it could be a nation state that is trying to get our attention and there are a few out there in today's headlines. but before hearing from a government official, it will be hard to make any serious at bugs in this case. >> leo, that term cyber vanldallism zshgs that mean they would not be interested in ransom and as a second question, is paying ransom ever the right answer >> well, to your first point, i'm sure if the actor could recover money and do it in a way that doesn't lead to identifying their -- who they are, there's no harm in getting more money if you can get away with it but that may not be the primary aim. in terms of who has the capability of doing this, it had to be somebody very
sophisticated with some ability to modify sophisticated tools and deploit tools with the right infrastructure >> all right leo taddeo, thank you for joining us >> you got it. thanks alrit.gh we're going to take a quick break here [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock. (b♪by crying) minutes old. ♪ a baby's skin is never more delicate. ♪
planned installation at san francisco's airport. the ceo of view dynamic glass joins us now good morning >> good morning. >> now, this technology is kind of like transition lenses for buildings, right talk to me about the costs involved versus the savings from heating and cooling. >> yeah, first, let's talk about what it is it is just like you said, like transition sunglasses, even better in that it's fully controllable you can program it, you can sense the weather. you can really create an environment that the occupant really wants inside the building so as far as the cost goes, it costs about 50% more than regular installed windows in a commercial building, but when you account for the fact that you eliminate the need for shades and blinds and you cut down the hvac system's peak load and its capacity, it almost pays for itself up-front and it may be up to a 1% increment in the
cost but what really makes it viable commercially and economically is the fact that you're creating a much more valuable space for the occupants, and as you know, today's spaces are far more interesting, far more about the experience than ever before. >> you say it almost pays for itself up-front. do you mean, not even factoring in the heating and cooling savings over a period of time, just because you don't have to buy blinds how you calculating that >> yeah, that's exactly right. this is a smart window this window automatically adjusts itself to control heat and glare. so you no longer need the things you used to put up on the window to control glare and it reduces the heat load on the edge of the building on the east or the south or the west side of the building, depending on the time of the day and those two together really make this a product that pays for itself in most cases up-front >> is it a -- i mean, i'm assuming it's a bit of a high-end add
and i'm thinking, if you're looking at residential, whether or not this is something that most builders would adopt or is this -- i mean, it is a mansion dynamic? how does that work >> yeah, so, you know, we're in pretty much every major market segment in real estate our bread and butter today happens to be commercial office, corporate office, but we're in airports, as you mentioned we're also in health care facilities we're in higher education and we're now starting to do high-rise residential. toll your point about luxury, you know, any space where the performance or the wellness of the people matters, this product will do very, very well. if it's a commodity space and you're just looking for cost per square foot and it doesn't matter what you do in the space, it's probably not the right thing at the moment. some day, every window will be smart, much like every mobile device is a smart device today but for the time being, we are targeting the type of spaces where the quality of life for the occupant is of utmost importance >> where do you do all your manufacturing? >> so we have our first
manufacturing facility in olive branch, mississippi. it's a suburb of memphis so it's right here in the united states and we distribute the product to, you know, north america within u.s. and canada, and we're starting to ship to international markets, as well >> rao, is there a trend towards use of more exposed glass in buildings? i'm thinking of apple's headquarters in cupertino, which is basically a glass disc, from the looks of it, and has apple driven that? >> yeah, i mean, clearly, you know, natural light and vaus ies are important for our wellness and productivity as humans and so as you've seen in building designs, the buildings now have floor-to-ceiling glass. you have all-glass buildings even in the middle of desert so clearly, light and views drive quality of life. except the problem is, when you use that much glass that's clear, it ends up creating issues with heat and glare as well and up until now, we've used blinds and shades to control the
glare, but then you lost the view with view dynamic glass, you bring two three times natural light into the building, and natural light is really proven to be important for our mental and physical wellness. it impacts our circadian rhythm and does, you know, our ability to function better in the space. so to the extent the space is important for the occupant, you know, this product will do very, very well. >> i know a lot of cubicle dwellers would agree with you, rao mulpuri, the ceo of view dynamic glass. thanks >> thank you very much >> as we go to break, take a look at some of the s&p leaders today. darden doing pretty well on good earnings and solid comps w,hoh,n a tight range, up 7 we're back in a moment [ indistinct chatter ] [ intense music playing ] it's here, but it's going by fast.
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watch tesla today, and anything related to elon musk. the chicago frye booun is reporting today that mayor rahm emanuel is talking to musk about the possibility of using a high-tech digger to bore out an underground high-speed rail line connecting downtown chicago to o'hare a project that would take a long
time and cost a lot of money, but interest that -- >> but if you've ever sat in traffic going to o'hare from downtown chicago, you will realize that this is probably very necessary it can take hours. >> there is nothing fast about getting into or out of o'hare. that's one of the things i've learned as a business traveler >> sad, but true >> let's get over to the half back at hq and welcome to the "halftime report." i'm scott wapner our top trade this hour, stocks surge. the first half of 2017, the bes in four years. now wall street tells us exclusively whether the rally can continue joining us, pete najarian, stephanie link, we do begin with the inaugural halftime survey. we asked 23 of the street's top strategists where they think stocks will go in the second half of the year and how your money will work best in the months ahead let's get right into it. doc, going to you first. >>