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tv   Squawk Alley  CNBC  August 28, 2019 11:00am-12:00pm EDT

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. good morning, it is 11:00 a.m. at peloton headquarters in new york city. 11:00 a.m. on wall street, "squawk alley" is live ♪ ♪ ♪ good wednesday morning, welcome to "squawk alley," i'm jon fortt with sara eisen and leslie picker live from here at the new york stock exchange. carl and morgan have the morning off. left me all alone, but i got a good pair. >> not all alone
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>> well, i was all alone until you guys showed up >> we're going to start off with the markets. volatility heating up. we've seen a big rebound in stocks this morning, though the yield curve is sending its strongest signal yet to the markets of recession inverlt verting to the worst levels since 2007 here is ubs global wealth management head of trading strategies ian, the move in bond yields, at this point what's driving it because some of the fundamental data later, consumer confidence yesterday has been a little better and yet we continue to see these new lows on treasury yields. >> frankly there seems to be a race to zero in the global sovereign debt market, whether it's driven by the fed or the ecb or what's going on in japan. the fact of the matter is u.s. treasuries yielding even now north of 2% end up being a huge buying opportunity, and that's what we saw in the long bond, and that's why there's been this consistent bid for ten and
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30-year yields at this range. >> and that's why the president is so upset this morning just tweeting out that our fed is not mentally keeping up with other central banks, and that they're all giddy over the low rates that they have there, and we just -- we don't. >> yeah, there also seems to be a bit of a circular argument involved here, and that is has powell actually been setting the stage for the administration to push further on the trade war front? and that's a real fundamental question for the fed should they be doing that, and if so, how does that play into the global outlook >> that's the dudley view. >> yes. >> former new york fed president causing quite a stir, saying to the fed yesterday don't enable the trade war. >> we're starting to see companies more and more reacting to this global trade uncertainty. we heard from both autodesk and hp enterprise. we're going to hear from the ceos later in the program. both talking about the uncertainty not so much from how it affected the quarter they reported but how it's affecting
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the outlook. how do you expect that kind of i guess fear about what might happen to affect these markets going forward? >> you're quite right. indeed we expect this increase in uncertainty to cap equities, and as a result we have decided to modestly derisk our portfolios the uncertainty stemming from disruption to supply chains and also to investment plans of ceos and cfos, but it's a very modest reduction in risk. we are neutral u.s. equities and are underweight in expressed development countries outside the u.s. as well as emerging equities which are more the focus of this. >> vinay, what needs to happen in order to avoid a recession next year? is additional fed easing enough, or do you actually need a resolution on the trade war to make you a bit more -- have a better conviction surrounding equities at this stage
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>> we don't expect a recession it is more that we think the upside is capped while uncertainty is so high if we did expect a recession, as you know, these recessions involve 30 to 40% corrections, we would have a far more defensive position in equities we don't expect a recession because the u.s. consumer is holding up rather well, and that is also reflected in our intersector, you know, distribution of equity positions. >> which is what i mean, where do you get exposure do you do the august play book or the defensives with utilities and reits already at record highs? >> we think the consumer is still quite strong, and therefore we have overweight positions in the consumer sector, both in basics and as well as in the communication services our underweights are in the more trade exposed areas, and that would be technology. that would be industrials and also energy. >> we are heading further into
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political season, do you expect the usual amount of market impact from the rhetoric and the polling around that, or something extraordinary given that not only do you have the president with an aggressive, if constantly shifting stance on china trade, but also you've got warren, you've got sanders and some others with some pretty strong language that's market related. >> yeah, i think that's going to be the biggest trade over the course of the next year. frankly what i was the most surprised about in 2016 wasn't the fact that necessarily the gop ended up with a victory, but more importantly how the market traded it. the fact that it was purely traded on the party i think was the biggest surprise for me. it had nothing to do with any uncertainty associated with one candidate versus another it was pure risk on. that's what i'm worried about next year, is if it looks like the democrats might actually
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have a chance at the white house, then we would see big riskoff that might lead the fed to do more, and then we're back into a dilemma not dissimilar to the one dudley has outlined. >> is it about the white house, though, or is it about the fact that all three, the house, the senate, as well as the presidency were all republican now you still have kind of a mixed party in washington, so would it have as much of an impact if the democrats took the white house as long as the republicans at least maintained the senate >> intuitively you wouldn't think so i would expect that you would probably have a smaller amount of risk off, a smaller spike in equity volatility and thereby a more muted impact on financial conditions, but it still matters, and that is the big trade for 2020 how the election plays out, and again, what that does or doesn't mean for the trade war. i think it's reasonably safe to say that there are the other side of the trade war in beijing
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would like to see a dirchtd player on this side of the table. that might be the trade they're waiting for. >> i don't know that an elizabeth warren would be any easier to deal with on china trade if that's who they're hoping for or hoping for someone else. >> easier or more predictable i think is the bigger question if we look at the headlines coming out of beijing, their biggest concern is lack of predictability, looking for a moment of calm to move forward. >> ian and vinay, thank you both very much. >> thank you. when we return, hpe shares getting a boost this morning after a beat on earnings the ceo joins us exclusively on th bakofter on the other side isre stay with us so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.
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shares of hewlett-packard rising in this morning's trade, seeing revenue fall slightly below the street's forecast. the stock still up this morning better than 3% joining us now on a cnbc exclusive, hpe ceo antonio neri. good morning >> good morning. >> i got to start with the macro environment because you pointed to it on the call right off the bat saying we continue to see uneven demand due in part to ongoing trade tensions, which impact market stability and
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customer confidence, but saying nonetheless that customers are continuing to invest in digital transformation when did you really start to see this, or was it just throughout the quarter? and as the quarter progressed, how did it change? >> yeah, sure, as i said yesterday, my prepared remark, we saw throughout q3 an uneven market with a little bit softer demand, and i commented on this at the end of q2 we saw already that in the last month of our fiscal year q2 and that continue and carry on through the q3 quarter that said, you know, customers correspondent to affi continue to affirm the need for digital transformation and take advantage of the explosion of data we see around us, which ultimately is the core aspect of how they arrive to the business outcome. so obviously the uncertainty create a little bit of a pause
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it takes a little longer for them to make -- that's what we saw in cycles. >> it looked from margins like you're not doing discounting trying to kind of nudge that process along. is it just a matter of the process taking a little bit longer because of that uncertainty, or is there a certain tactic that you're tending to use in certain regions to move things along >> no, jon, listen, i think we executed with incredible discipline both on the cost side and on the pricing side. you know, we actually have done a remarkable job in the last seven quarters to continue to make our cost structure more competitive and to streamline everything across the company. as you'll recall, when i became the ceo, i established three key priorities for ourselves, and one of them was to start with our hp next program, which was to rearchitect the company from the ground up. that included a cost benefit, but at the same time a portfolio
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shift, and we're seeing the benefit of that portfolio shift today in our margin profi and s that give us the ability to expand margin significantly, and i believe we deliver record levels of free cash flow which give us the confidence to raise the guidance again for seven consecutive quarters >> always a big player in the enterprise hardware market, and it's been quite a while now that we've seen the u.s. putting pressure on companies not allowing them to do certain types of business with huawei. what has the impact been now that this has sort of been normalized throughout the enterprise hardware ecosystem, what's the impact been what do you expect it to be going forward? >> well, i think it's an opportunity for us listen, we have a very complete portfolio from the edge to the cloud, and that digital transformation starts with the connectivity, secure connectivity, so we have a
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phenomenal platform that provides mobile first approach at the same time, you know, we are here to serve our customers in the countries where they participate, and we have a very diverse global supply chain that allows us to navigate through these challenges i take this as an opportunity for us to serve our customers better and continue to provide the value they're looking for and obviously we need to -and-a-half navigate through this uncertainty in the end we're really focused on our businesses and our customers. >> your cfo objen the earnings l yesterday said fiscal year 2019 will be one where you do focus more on eps and free cash flow, less so on growth, but that would come in subsequent quarters can you give us a sense of timing in km you would focus more on growth and how the macro backdrop could impact those plans? >> yeah, sure. i mean, as our cfo said, you know, we focus this year in
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stabilizing our business and continue to shift our portfolio to higher value, higher margin, and deliver everything we can as a service to our customers, and you see the results of that in our portfolio mix in key strategic growth areas like high performance computer which is the backbone for how analytics and ai will be run going forward. and we are extremely excited about the completion of most of the acquisition of cray which will be completed by the end of q4 at the same time in the core business we have to continue to deliver hybrid cloud solutions deliv deliver as a service we are on the journey. we make tremendous progress, and we have a truly differentiated offer, which is to deliver everything as a service. at the same time, because we have created more room for ourselves to invest in the business, we have invested in r&d, which allows us to position ourself for growth in 2020 to
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'22. as we get to the security analyst meeting in october there in new york, we're going to share our plans, you know, where we're going to grow and how we can return to what i call company grow and total, but we are very confident in the three years plans we have put together for 2020 to 2022. >> you've emphasized that three-year plan. some analysts, even the ones who are relatively bullish are wondering about 2020 and how much growth they can expect there based on what they saw as a sales a little bit light in this quarter what would you say to those who are concerned about 2020 growth even outside of that three-year growth target that you have? >> well, you know, we have taken deliberate actions to -- certain areas of the portfolio, we call the commodity business which used to sell to big cloud prf providers, and we have been winding that down for the last two and a half years
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the peak the business used to represent almost 20% of our computer revenue, today it's 2% of the revenue so if you do the math, that was several billions of dollars, so we have transitioned that out almost, and at the same time, you know, we continue to grow the other areas of the portfolio. as we make the crossovers, i am very, very confident that in the 2020 and beyond, we're going to see a consistent execution of growth but in the areas where we actually can deliver better margins and better revenues, with our hp services and hp green lake that's our plan. that's our focus we are on that journey we're making rogress, and you know, if you think about some of the strategic areas, you know, our storage business this year is going to show growth overall. our portfolio excludeing the china part is going to show growth hp green lake is on double-digit growth so we are on the right path in the areas we want to invest, and i think the next three years you
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will see the result of that strong execution >> we will continue to track it. thank you antonio neri, ceo of hp enterprise. you can see that stock up better than 3.4%. getting some breaking news on apple, josh lipton has more from san francisco. >> news here on apple. "the guardian" is reporting that hundreds of apple workers in europe and these were employed through contracting firms who were working to check seiri recordings for errors are out of work apple had suspended that program. that story revealed how workers could hear information while checking siri recordings apple did emphasize from the beginning that the data sent back was encrypted and randomized importantly, apple also is putting out a release saying, listen, it's going to resume what it calls its grading program later this year. there are going to be some changes including apple saying
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it will no longer retain audio recordings of siri interactions and users will be able to opt in to help siri approve only apple employees will be allow ed to listen to audio sampl samples. some changes coming to that grading program. shares of autodesk getting slammed in today's session after lowering its fiscal 2020 earnings forecast. the ceo joins us in another exclusive interview right rehe on "squawk alley." don't go anywhere.
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shares of autodesk falling sharply this morning down more than 10% despite an earnings beat after the company lowered its fiscal 2020 earns forecast citing uncertainty over trade and global economic conditions currently the worst performer in the s&p. joining us now in another exclusive, autodesk president and ceo andrew anagnost.
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good morning. >> good morning, john, how are you doing? >> i'm doing pretty well markets taking this news of yours kind of rough, even though your quarter was strong. you said you're gaining share, and adjusting your outlook just based on macro conditions not in reaction to really weakening demand it sounded like, so explain again for those holding the stock or maybe not holding the stock who might have missed it, what really is going on here why did you lower the forecast >> yeah, so this is where ceo means chief emotions officer to put this in context, let's be clear. you know, at the midpoint of our revised guidance, the company's revenue is still growing 27% we're still seeing 40% growth in billings and 12% at the margin at the midpoint. what people are thinking is wow is that really what's going to
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happen or is autodesk exposed to something bigger that is not going on we saw some softening in a couple of markets in europe, particularly around the u.k. and germany. what's really driving our business is our customers' investment in digital transformation digital transformakes is a fife-year macro trend for our customers in every single s segment, product design, media entertainment. that trend is not going away customers are going to continue to buy they're going to continue to buy construction solutions they're going to continue to buy autodesk leading solutions in products and engineering and they're going to continue to invest in building information modeling we're just being cautious, being prudent based objen the noise o there. we believe we've got the numbers right. >> you said the construction industry is also holding steady, according to from the call, and continues to invest in innovative solutions we saw ongoing strength in construction this quarter.
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specifically in asia, not just in china, but regionally, what are you seeing is there any impact demand wise of the tariffs and the trade war? >> remember, autodesk's exposure to china is less than 3% of our business, so we don't have a big china exposure we did absolutely cite slowing in china as one of the factors, but we actually still grew in china significantly. but we're just not growing to the same level of expectations we had at the beginning of the year so yeah, there's been an effect. we can't work directly with the state-owned enterprises like we were able to do previously, but it's a modest effect on our business, so we don't have a lot of exposure. >> we similarly heard from hp enterprises ceo just a couple of minutes ago that digital transformation continues to drive this market, despite the macro uncertainty. is there a point where that tips are there metrics, numbers that you're watching where it does
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become a concern if, say, there's a no-deal brexit or other things that you think could tip the scales in a bad direction? >> yeah, so we always watch the low end of our business, and the low end of our business is growing robustly, but one of the more important things i want people to pay attention to is even back in '07 and '08 which was a much bigger contraction than anybody thinks koulcould hn over the next 12 months, our business continued to grow in the digital transformation areas. construction i.t. spending continued to grow, and that's because when people are trying to transform their businesses, they're investing for the growth on the other side of any slowdown, so we still anticipate that digital transformation is going to continue to grow, even if we see broader signs like a no-deal brexit or something associated like that. >> what are you doing with investment in r&d, in capabilities, sometimes during periods like this where
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investors are questioning a stock, even when there's a slowdown, which it sounds like you're saying there's not much of, either companies will pull back or perhaps put their foot on the gas when it comes to investment what are you doing >> yeah, so look, we were in a slow fwrogrowth mode for almostu years. we are investing we are investing in go to market, we are investing in r&d because we believe the future over the next five years is incredibly bright, and our customers are getting disrupted in every single one of our markets we serve they need more advanced solutions. they need capability they need tools for digital transformation we're investing in all of them the construction investment is the most visible one right now. >> andrew anagnost, ceo of autodesk, that stock off 10%, but perhaps the investors aren't hearing exactly what you need to communicate, thanks for clarifying all of that for us. >> thanks so much. european markets set to
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close in just a few moments. seema mody has a breakdown for us of all the action overseas and some political drama too. >> certainly a lot to digest, stocks in europe are down with the exception of the u.k british politics dominating the conversation prime minister boris johnson proposing to suspend the u.k. parliament for a month it's seemed as a political tactic to halt the imposing mps from stopping a no-deal brexit as that deadline of october 31st new year's they could call a no confidence vote in johnson. quote, it would be very hard for jeremy corbyn to seek a no confidence vote. the pound is getting pounded it's down about a half a percent, though off the lows of the day. stocks in the u.k. staging a reversal, we're higher by half a percent. some of the major u.k.
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multinationals are all under pressure as stocks in the u.k. remain in focus, it's worth noting that investment in u.k.'s private startups have hit a record high in 2019 despite these concerns over brexit, new numbers coming out today show that u.k.'s tech sector has nearly raised $7 billion in 2019, and companies like fin tech firms including checkout.com and oak north, big investors, softbank and amazon leslie, back to you. let's get over to sue herera for a news update. >> thank you so much here's what's happening at this hour, everyone at least 25 people are dead after an arson attack by a suspected gang member on a bar in southeastern mexico 13 more people have been hospitalized with serious injuries the attack is one of the worst since president lopez obrador took office in december pledging to make mexico safer t citi raised its minimum wage to
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$15 an hour. the move follows political pressure from representative waters and others and similar steps by other banks. senator johnny isakson, republican from georgia has announced plans to resign at the end of 2019 citing health reasons. he has parkinson's isakson was first elected to his position in the 2004 midterms. it means both senate seats in georgia will be open for november of 2020. and fit bit announced plans for its latest smart watch, the versa 2, which adds amazon's alexa, music storage and online payments the versa 2 will cost $200 and preorders begin later today. you are up to date that's the news update this hour leslie, i'll send it back to you. >> thanks, sue maybe that's a watch to wear on the peloton, because that company revealing its ipo filin late last night. we take a deep dive into that prospectus next ahead of a debut that could come as early as
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september. we're back after a quick break ♪ keeping the night interesting, is all about setting the right tone. ♪ lower carbs. lower calories. higher expectations. ♪ the light beer you've been waiting for has arrived. corona premier.
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welcome back to "squawk alley," peloton revealing its ipo prospectus last night as a technology, media software product, experience fitness, design, retail, apparel and logistics company, if your head is spinning, you may know the company as the maker of at-home bikes and treadmills ceo john foley penned a letter in the prospectus simplifying the business model even more saying quote, peloton sells happiness. exercising creates endorphins and endorphins make us happy sound familiar >> exercise gives you endorphins endorphins make you happy. happy people just don't shoot their husbands they just don't. >> happy people may also be more optimistic about the latest crop of ipos. peloton says it has half a million subscribers which have helped double revenue in the
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year through june, but losses quadrupled over that same period the company is expected to make its debut next month with a listing of the nasdaq under the symbol pton. comcast the parent company of cnbc is an investor in peloton guys. >> that was the most impressive thing ever to get a soundbite from "legally blond" into your hit. >> i've been waiting a decade for this, for a chance to insert "legally blond". >> you made light of the fact they characterize themselves in so many different ways. >> yes >> it'r how this company ultimately gets value. >> i think you're going to have a lot of conversations wit high-flying technology multiple that looks more -- that weights more on the software side of things, or am i going to look at other things about their business that may be, you know, command a lower multiple, things like the hardware size of their business, things like the
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logistics side of their business coming in at a lower multiple. >> apparel. >> exactly apparel, retail, which they sell in their stores, and so that is definitely going to lead to some confusi confusion, and that's what makes the road show, which could kick off as soon as a couple weeks so important. but it's already been a big year for ipos, uber, lyft, slack to name a few beyond meat, zoom video and crowd strike leading the post-ipo gains race. beyond meat up more than 500%. of course all of this as we still await a debut from wework and a renewed focus on shareholder democracy. our next guest says companies should not be allowed to play by their own rules with dual class or three classes of shares joining us patrick allen thank you for joining us in this peloton filing, they say that, you know, they wil a higher weighted class of shares, 20 votes per share whereas class a shares will be kbirch one vote
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each it appears they will have a sunset provision in there after about ten months smile direct club had a sunset provision as well. pinterest another one with a sunset provision is that enough for you >> ten months? >> ten years, sorry. decade >> the sunset provision i think actually is a reasonable answer to this, but i think we've a disease that set in starting with the google and facebook offerings, which are back now seven, eight years, and it doesn't stop and of course the poster child is wework, which is going. snapchat was the poster boy in terms of overdoing this class voting but a sunset provision is one answer there are a lot of other answers. one of the things is the exchange could put their foot down and say they're not going to list. >> you've seen indekxes put thei foot down, and they've pushed back. >> it's had some effect, and the
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institutions it starts with, and the the council of institutional investors. there's a whole food chain that could speak out on this issue, and what's happening is companies are going public, but they're not going public i mean, they're saying to the public, we'll take your money but you're not going to really have an opinion. we're going to be able to make the decisions. >> the business round table came so out and said companies don't need to be prioritizing shareholder value anyway for societal good, so you know, at this crux, should shareholders even be that upset about things when they're kind of getting relegated anyway in the minds of ceos in corporate america, some ceos in corporate america. >> they actually should be and what was brought out last week in terms of shareholder value, you and i both know has more to do with pure economics than koz t -- cosmetics, the fact that you can't just think about your shareholders you've got to think about your customers, and you've got to
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think about your employees and society in general i don't think that weighs in on the issue of dual class voting dual class voting is a ceo who says i want to tap into the public markets, but i want to control afterwards and i don't want to take a chance. i mean, there's a whole discussion, for example, on the uber situation of where there was control, where there was dual control, but it was a not differentiated, it was split among various parties and we'll never know what would have happened if travis had actually had super majority control of that vote and what the outcome would be other factors weighed in. >> uber went public with a single class of stock, and presumably you as a venture capitalist have been a beneficiary of this dual class share structure, so you've seen it from the other side. >> i wouldn't say -- i check just for curiosity in the last week, we have 220 companies in our portfolio. there's not one company at the venture stage that has dual class, not one
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and most venture capitalists don't have it, and most companies going public don't have dual class. we've had a few, more than a few now, and i say a disease because it's really -- it's contagious, peloton -- >> can you explain to the viewer, though, allen what's wrong with it? they might look at a google or facebook and say well, it didn't work out too poorly if you're a shareholder. >> no problem has developed. if you wanted to get rid of the ceo and the ceo has bigger rights in terms of who goes on the board in several cases including weworks and snap, and i don't know about peloton, it succeeds their lifetime. it transfers to their estate and their wives, so i mean, it just doesn't make sense i mean -- and you know, everybody is at fault along the food chain actually, i don't think venture capitalists are really -- and i'm not defending them i did check. i've never seen it in any of my companies. it comes up at the time they're
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going public, and it's now getting to been -- you know, it's incessant, it's every place. but not every company can pull it off, a peloton, which is popular with the public and, you know, zoom and other companies zoom has a sunset provision that's 20 years. how about that one. >> that's a long time. >> that's like having a 99-year lease on a property. >> what should investors make of these creative to put it kindly, explanations of what these companies do i mean, we saw it from go pro when they said they weren't a camera company they were a media company, which of course they weren't we see it from wework now and peloton. >> wework wants to be a technology it's not a real estate company. >> they're selling happiness, which i thought, maybe it's love you can't buy. maybe you can buy happiness. >> this came about about five, ten years ago when the s.e.c. changed the rules and prospec s prospectus, instead of having these very stiff prospectus, they let you put in pictures it was called, i think the
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technical word was plain language. >> i like the pictures. >> you can talk in plain language what you've just shown on camera is the ultimate of plain language. >> quoting "legally blond". >> reese witherspoon is fabulous i don't have anything against that they're trying to portray their company. peloton is based on prospectus is 80% an equipment company. however, of the members i was very impressed by the very low churn rate, and churn rate is the key in a software product and i think it's like a half of 1% >> on a monthly basis. >> amazing. >> on a monthly basis. alan, thank you so much for your insight as always. really appreciate you joining us >> thanks, thanks for having me. meanwhile, stocks turning around at session highs, a lot more "squawk alley" right afr quk eak.te
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i'm scot walker, here's what's coming up halftime report top of the hour, with recession worries ratcheting up, where is the best place to invest right now? our investment committee is on that case along with the former chairman of goldman sachs asset management jim o'neal. plus, the airline called, we're going to debate whether it's the best name to buy in the group. and a fitness media software social apparel logistics retail and design company prepares to go public. that's how peloton is describing itself today should you buy into that story it's all at nan on the half. jon, you guys were just discussing we'll see you in 15.
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>> you sounded like you just got off the peloton after reading all of that. looking forward to it. now it's time for the santelli exchange. let's get out to rick santelli in chicago. >> thanks, jon, you know, yesterday i didn't get to weigh in very heavily on ex-new york fed president's dudley's comments cnbc did a wonderful job in that regard and pretty much everybody i deal with on trading floors was pretty much dismayed that a fed member of that high order and being a head of a new york fed is a key post within the organization would have and harbor such political issues, i'm sure they didn't just crop out of left field after he left, but does it really matter? the president does things that are a bit unusual with regard to how he communicates his thoughts to the fed i'm more interested in the fed's response the response was the right response basically, forget all that stuff. maximum deployment and price stability. the problem is that's a bit of a stretch too. if you look back at central banks and particularly our centralback, they really went
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way over their skis if their two pillars is the only thing that's supposed to give them life with regard to how they interact in the marketplace. indeed, they and all central banks have robbed all of us of market signals markets don't really care about data much anymore in the u.s they certainly don't seem to care much about all the auctions and the enhanced size and how much t-bill issuance is coming and the debt and debt accumulation that the country has but these markets will at some point care. it's just that it's very hard to determine when that time is. but consider the fed's answer, it's all about price stability, okay, maximum employment, which leads me to the thought of does that mean that the current fed thinks that lowering rates will address either of those issues and improve them and that is to me the important issue not to lose sight of, even though they have evolved into kind of greek gods with respect to how they think they influence the u.s. economy
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they went from nudgers to transformers, to disrupters of the first order. i don't think lowering rates is going to address those two issues, and mario draghi's gotten in front of the fed in the last meeting and certainly they're going to do it again in september 12th but the one thing that dudley's op-ed didn't mention at all on bloomberg, and that was an ira harris and i have discussed this, it's the dollar. we're the reserve currency this president wants to make the most political hay he can. i get it he wants the economy to have its fastest quarter mile time as the election comes, even if it robs that engine of future performance, but at the end of the day, he can also go around the fed by fx intervention, which dudley never mentioned, and this is the road less traveled and much less damaging, but this president is determined, and that ought to be a discussion we have reserve currencies shouldn't play maneuvering in the fx
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markets. leslie, back to you. >> rick santelli, thank you so much dow back in the green at session highs. here are the names leading the index higher this morning. we're back in a minute
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beyond meat's pea protein supplier receiving an investment from cargill this comes as more restaurants and fast food chains are adding meat substitutes
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nestle's ceo commented on the demand for plant-based alternatives >> plant-based is a major, major theme for us and is not only about meat but also about dairy. think about ice cream, think about -- on the burgers, we have it out in europe we're doing really well. we're launching the awesome burger in the united states in september. we're a few weeks away from that, and it's going to be great. >> joining us now, the president of purist, tyler lorenzen. are you really the biggest supplier of pea protein in this country? >> absolutely. we were the pioneers of creating pea protein isolate here in the united states and backed by a plethora of usa farmers that we supply seeds to and buy their crops. it's been an exciting time the past few months in the pea protein space no doubt >> talk about what you're seeing in terms of demand from beyond meat and whether you deal with other companies as well.
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>> yeah, we deal with a lot of different companies. really purist is the engine behind the shift more the intel inside. when you look at what the market needs is really consumers are demanding more the market is growing at 31% of plant-based foods and expect to keep growing $4.5 billion industry and by 2030, $85 billion industry the opportunity is massive consumers are demanding the products what we're doing is trying to enable it through investments on manufacturing, also with our growers. >> we see announcements almost on a daily if not -- maybe weekly basis of major fast food chains adding beyond meat or impossible to their menu so are these companies, specifically beyond meat, hottest stock of the year, able to keep up with the rising demand >> it's a shift to the mainstream consumer adoption and
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really how do we bring this to the table? really when it comes to beyond meat and other manufacturers, they have their role and creating the marketing and consumer touch points. then behind that is the manufacturing of the ingredients and the ability to supply. i'm certain that farmers can i know puris through our partnership with cargill and other manufacturers are coming to the plate as well. i'm excited what all the brands are doing, how they're speaking to the consumer needs and really where this market is going over the next few years >> tyler, here's what i don't get. i remember the beyond meat prospectus they talk about getting a majority of their high quality pea protein supply from europe it sounded like supply was going to be an issue but then since they went public it sounds like they're saying supply is fine it sounds like either supply really is fine, and the price that you'll be getting for your pea protein maybe isn't that
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great because supplies aren't tight or maybe we're not hearing the whole story about how tough this market really is to get enough pea protein which is it? >> it's certainly a capital intensive business, and the size and quantum of the market needed to be there for companies like ours to invest in it and with help from cargill, we're able to get ahead. when you look at the beyond meat and everyone in the plant-based sector, it's growing that double-digit clips so no doubt it's going to take a lot of effort. but what we're doing is debottlenecking it and adding that production capacity the farmers are able to provide the peas, i'm sure of that as well as the manufacturing is going to be there. and we'll continue to invest to stay ahead of the market because there's a shift. consumers are speaking they want to eat meore plants ad we'll provide that it's good for the farm, the whole system i'm excited we're right in the
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middle of it >> when you say debottlenecking, what do you mean by that what are limitations to the supply you're trying to overcome and how quickly can you get there? >> similar to the organic food market, when it first started, the infrastructure wasn't 100% built out. it took pioneers, believers to invest in the industry and really take it to where it ultimately would become. organic food is a $50 billion industry it doesn't start there overnight. through the investment, between a multitude of companies, including puris and cargill, beyond meat unestle and others, the consumers will get the products they're looking for and i'm certain of that because we're actively doing it. $75 million investment by cargill into our business to do this and we're trying to make sure that our customers are happy and the consumers are well fed on plant-based nutrition. >> tyler lorenzen of puris, thanks for joining us on the news >> fresh session high for stocks
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later on the "closing bell," ubs cutting its view we'll speak with the head of america's asset allocation about where you should be putting your money to work instead of stocks. after the bell, another read on the consumers. pvh, williams-sonoma and five
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below all reporting earnings see you at 3:00. before that, to the "half. thanks for being with me today let's get to scott wapner. >> i'm scott wapner. the message of the markets recession signals flashing bond yields falling. the trade war raging where is the best place to invest right now it's 12 noon this is the "halftime report." >> is the countdown to a recession under way? and where do stocks go in the months ahead the fear and uncertainty piling more pressure on powell. should the fed cut rates next month and how big should they go >> a big call on jetblue why the stock may be ready to take off the investment committee is ready to go. "the

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