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tv   Squawk on the Street  CNBC  August 13, 2015 9:00am-11:01am EDT

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consumers and farmers. the hope is the next round of bird flu can be swarted athwart >> thank you very much. i hope you get some eggs out there. >> egg on a stick. thank you for being here. we are glad your vehicle is safe and sound. make sure you join us tomorrow. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. the bulls trying to follow through on yesterday's upside reversal. we are coming off the highs in the morning. china intervening for a third day saying there is no basis for a further devaluation. retail sales for july in line, .6 higher for june and may.
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oil still trudging below 43. our road map begins with china's ripple effects across the global markets. was a secretive news conference enough to stop the bleeding. >> retail sales are rebounding. some major retail stocks falling hard. more pain to come in the sector. two stocks sinking on secondary offerings. how should investigators make those moves? futures lower. china allowing is currency to weaken against the dollar for a third straight day. cutting about i 1.1. the third straight day of cuts as applies to markets. you sat here yesterday and said you like the setups and you saw what the dollar was doing. >> people are going to think these are okay. the dollar is back to being strong. oil challenging 42.
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those stocks were integral to the turn. interest rates kind of doing nothing. the earnings other than cisco. the retail earnings directly in contrast to the retail sales number. you put macy's and kohl's together, you have to wonder what nordstrom is going to say. yesterday was perfect. today, not great. >> kohl's had a negative comp a year ago. they barely managed to get above the flat line. people are wondering, is it jcpenney that's taking share? after macy's week and then this. >> would penney be back? i don't think so. i think target, my charitable trust owns it. i am going to point to way fafa. they are a category disrupter in furniture, in furnishings and people are ignoring them.
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they don't understand this is amazon for a very important quality. >> i don't think they are ignoring them. was the stock up yesterday? >> it is people don't think about the name wayfair. i am going to emphasize them. i think online is taking so much from bricks and mortar. we were thinking about omnichannel. i don't think macy's may be done. macy's said they are having growing pains with a steep learning curve. hello. i thought omnichannel was supposed to be there for ever. you can't keep up with the amazons and the way fares. the wayfairs, 800 customer service. >> i did not know that. i didn't. >> you probably thought it was more like 500.
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>> i hadn't really thought about it. >> i am just saying there is this model on the web. it is the first model that is customer service. when you are buying furniture, which is a category that's exclusively department stores. look out. you need a customer. you need someone to say, listen, i think you can get that through the doorway. i think this will be fine. how does that look. i am talking about millions of shop keeping units. this is another category they are going to carve up just like they did electronics and media. >> what you are seeing is a change in the way people shop. you buy the retail, the macro numbers. may going from 1 to 1.9. >> i dubai to buy the macro. if people buy hardware, they are going to fix up their homes. the rents are the highest versus are mortgage rate ever. people want to buy homes, because homes are scarce and they are going up in value. when they get a home, they want to fix it up. what they do is they go to home
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depot and lowe's. >> the case of kohl's, unlike macy's. i don't know that many people are going to kohl's. >> that's not a strong terrific. t.j. t. t.j.max is not a derivative. >> did you see the price they have on t-shirts? they cut the price every day. it's amazing. >> are you expecting good things from nordstrom tonight? >> nordstrom does have a better web build out and a better rack. the offline is good. i like the fact that all these other guys are disappointing. it might not be down as much.
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the american consumer is not going to the department stores or the strip malls. >> if we could get back to the broader market before we move on, what should one make of that? here we are again with obviously as we started the show, with the chinese devaluing a bit more in terms of the pay. >> this is about the fed, whether it will tighten. you break down. no turmoil last night. suddenly, you are going to way for lockhart to come on and tell steve liesman, we have to tighten. it is going to cause the dollar to get strong and you will have to go through this nightmare. either fed rake or chaos. >> the read from last night among some is the way the fix has been working the past couple of days. they are trying to signal that they are not swinging for the fences or going for a 10%. do you believe that's true? >> i think they don't know what to do. there was a press conference that was loosely translated to being, fear the market, respect
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the market. mali mal is rolling over his grave. he is like, are you kidding me. he was talking about manipulating the market, because sometimes it can be like a herd of sheep. >> this was an out of body press conference. >> and one that foreign press were not allowed to be in. >> cuff a press conference if you don't let some of the press in? >> i think the chinese are struggling really hard with being open. stay closed. geez, i don't want to be in that kitchen. geez, what are they doing over there? honestly, that press conference is. >> what are they doing over there is toolly the most important question. it is not engendering
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confidence. >> it is not clear what they are doing. >> they are spending hundreds of billions of dollars to pop up the market. had they just spent 10 million buying ali baba goods. you know what that interview would have been like? exactly the same. >> they could spend years trying to figure out what they are doing and still come away. >> he is saying the baba is that. the economy is slowing at 28% growth. i know that is terrific. we were looking for 45. i was watching someone on tv saying, hey, listen, all it is is the quote. they used that line that i hate so much. other countries would kill for that growth. they are looking at nearly double digit retail sales.
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not every country has that. >> i still think the export economy is what i knew them as. the import economy is morbid. they have to go 5 million. they have to start buying iphones. >> they are in there buying stock and manipulating the currency. it is a shame. japan lowered its currency. we talk about whether cisco and chuck robbins did a conference call. what's the chinese conference call? >> better than expected, better than expected. who knows. >> it is operation total victory. >> all operations in china are operations total victory. >> you mentioned cisco. adjusted earnings did beat estimate. better software sales have the stock higher in the pre-market. the first quarter, seen by chuck robins who did join jim on mad money.
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take a listen. >> we are bullish. first of all, we are really pleased with the quarter we just had, record revenues, record nongap eps. we grew our orders by 4%. at the same time, we grew our deferred product revenue by 21%, which is reflective of the transition we are driving in our business. overall, we are incredibly pleased. >> the take on their earnings was relative to all the other earnings we have seen. >> these were sort of boring. >> it was terrific they gave guidance in the press release we didn't have to wade through all the talk about congratulations to this guy and fabulous that guy. john chambers always loved to credit people. you listen to the guy. they gave you the guidance in the call. chuck robbins, if you notice that deferred revenue, he mentioned that. that's not what chambers talked about. that's software. this is a company transitioning from hardware to hardware and software where the margins will be better.
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this was a breakout quarter for them. chuck robbins has a bit of a different tone. he has kind of a tnp tone, take no prisoners. i'm not going to say he isabe a belichick. >> he doesn't live in a lair. >> no. he is not like rex ryan. there is a sense he comes in with a lot of enthusiasm. he has changed over the whole team. a lot of women at the top. he doesn't brag about it. people think women are not at the tap. look at the people that he put in at sisccisco. kelly cramer. >> no relation. >> she spells it wrong. i was going to try to correct it. i didn't think it was right. >> for a dow component that is essentially flat on the year. you think the robbins era? >> it is 12%. somebody e-mailed me, aren't we ready for a crash. $50 billion plus in cash, only
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$7 billion in this country. you can't get the money. every time i look at these big tech companies that people tell me are going to crash, i see 11, 12, 13 times earnings. apple, really dangerous. no. no, buckets of cash. this isn't like 2000 where the companies were at 80 times earnings and they had no cash. they are at 11 times earnings and they have a lot of cash and dividends. the expensive stocks in this market, you know, cereal. >> there is the twhaun sells burgers that's pretty expensive. another that is taking over the streaming world. all of tv is pretty expensive. another one that sells these electric automobiles. it is pretty expensive. >> tesla, insider buy. >> shack, there are only 4 million shares. they priced it way in the hole. i can come back. >> don't forget, shack at 60, mcdonald's is only valued at $4
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trillion. it is better than $6 trillion when it was at 9. >> we are going to talk about it was 76 a couple of days ago. >> man, the shackmeister. it was actually dealing with both stocks. >> where can you get the shack chicken sale? >> in brooklyn. >> brooklyn is back. that's how you know. >> $270 million sale of a macy's property. the nets and chicken at the shake shacks. >> we are going to get to tesla and shake shack. secondaries moving in opposite direction. taco bell upping the ante. the dow at session lows did hit the lowest level since december. a lot more "squawk on the street" from post 9 in a minute. at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason.
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tesla planning to raise an additional half billion through the sale of shares. elon musk will add to their stake for development of the energy business and upcoming process. an article in the times says tesla will be unveiling new tesla charging stations in
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manhattan today. a couple weeks ago, jim, you said, a capital raise would give the bulls some more ammunition. that's clearly what's happening. >> you are at $500 million. musk buying is going to make people feel like i have to go be in some charging station story exactly at the correct time. we used to have showmen on broadway. i don't think they have those areas. they are on wall street or wherever he is. this is the most orchestrated job i have seen. moves the stocks up. talks very positively. gives you a hint there may, indeed, be a capital raise. comes in with a common stock, not a bond. i don't know what to say other than bravo. this guy knows how to run a stock. >> to be fair, he is the same gentleman who once told phil lebeau, i think my stock is overvalued. remember that day. >> what can i say? he did make the shorts.
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he got the shorts going on that by making that comment. >> that was some time ago. >> look, he knows how you to run a stock. he would be a fabulous analyst. >> i think he is doing okay. >> he is doing okay. >> i think so. >> you think his life is good, better than ours. >> it is like excesstential with you? >> he is offering 4 million shares. they priced at 60. why would they do that first of all? >> look. the stock is overvalued. we all know it. they have put it in the hole. there are a lot of people who are asking, very retail people that are asking at jimcramer on twitter. there are people that say, i love the burger. there is a good opportunity to buy stock. that's what they want to do. you have to get the shorts to cover on this block. the shorts are so huge. that's what they are betting. you give them that juicy, sounds like the burger.
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you give them that opportunity. maybe the shorts would take it and clear them out. that would be really, really smart for everybody. that's what i think is going to p ha. they are hurt by the price of eggs, which has sky rorocketed. >> moving in on $6. >> i know i had charles. they had the egg company working on bird flu. the stubborn beef and pork and chicken complex versus the grain complex, has got a lot of people per flexed. these people aren't benefiting from the decline in commodities. we'll count down to the opening break. claims the four-week average another post-recession low at 266. back in a moment.
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it is time for a mad dash on this thursday. rite-aid, bank of america recommends call structure leverage. 1741 stores have been refurbished out of 4,570. they can truly refurbish their way into a higher price. 25 million customers in the loyalty program, including me.
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$11 price target. it is going to get there. >> you make that point on their debt. there is an opportunity to lower their cost. all this high coupon debt. ai lot of people think, someone is going to pie then. it gets there on its own. it is not a takeover play. >> where are we going next? >> gw phrma. >> it is a class one felony to be able to do what they do, to grow marijuana in our country. $185 bull case. i am talking about for serious seizures for children in epilepsy, horrible. the off label he use, this will be the first medical marijuana that is actually dosed. so the doctors are always afraid to say, listen, go to your corner store. these guys will have it. it can't be made in this country. that's why this country is ripe for an inversion. >> someone else coming in there. >> it is not that large.
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>> it will be a little inversion, little inversion. >> but i do think that this is a very good upgrade. people should read it to understand this is actually an off-label play on canada. do not ever think it is just that market for epilepsy, which is too small. >> we'll watch shares of gp phrma, along with shares of a lot of other companies. we are just getting started on squawk in the street. got the opening bell about six minutes away. stay with us chls.
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you are watching cnbc "squawk on the street" live from the financial capital of the world, the opening bell in 2:30 on a day where china makes it three in a row. upward revisions for june and may and europe, jim, which had its worst day of the year yesterday. trying to make up for some of that. germany is up 1%. >> we are going to give it back. i don't know how much we will give back. the same team of stocks that led it yesterday, the oil is coming back pretty hard today.
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we have separated from what seems to be good for europe is now bad for us. they are all about the euro and a subsidy of all their companies again look out. this is not what you want. the follow through that should have happened about the strength in the clothese, you are not go to see it. this is about the dollar and the fed tightening. who is going to tell someone later in the show that it is time to title again. that's what the dollar reacts to. >> i want to look at oil as well. >> we have to talk oil. the hoo he roe, tero, the bankr billion in debt. >> the world bank saying a lifting of the iran sanctions. there is some support from the left. would mean a 14% drop in global oil prices. >> they are going to have a conference. >> how do they get to that?
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>> it is 1 million barrels. we can't handle 1 million barrels. we don't know where to put in all this saudi oil that comes in. saudi has a heavier base than the crude. the refineries like it more. there is no place to put it. every one of these day rates are through the roof. no one knows where to put all the oil that's being pumped. they have lots of projects. a lot of these european countries are so thrilled. they are the real drivers of iran coming back into the world. >> twi looks to open about 45 cents. you are going to see a lot of stocks. hero was a real company. it was $3.50 last year. watch out. this is the first of many to not make it. 43 has been your number for a
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while. >> it is a crucial test. a lot of discussion that the saudis are beginning to pay off and watch out the players that they wanted to. >> there is the opening bell. at the bottom of are screen. they will be celebrating their ipo. we are dpg to tagoing to talk t investment ceo when that stock opens. state national companies, a property and casualty insurance provider. we will keep our eye on oil obviously. keep our eye on shack, which was down 9% premarket. then, a variety of analyst moves, gym, whether it is merck, getting upgraded. yahoo! bernstein, upping to not perform. these are value stocks. they are talking about the hepc franchise is underestimated. finally, somebody is talking
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about the alzheimer's franchise. he did not talk about that atal. yahoo! upgrade finally suggested perhaps bernstein is going to be able to get the tax break. even then, the company is still inexpensive if they don't get the tax break. yahoo! is up 1.5. alibaba rebounding a bit. $6 above its ipo price. the highs were when i was over there during singles day last november when it hit 120. that was the top. >> isn't that something? >> important to watch again as you move into the fall period and the singles day again, which will be bigger than it was last year. it is quite an event they have created. >> it is all made up. am ma john has their little day
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they have made up. what's your day? >> every day is my day. >> go pro, also another analyst move. >> that's a good piece of research. it talks about the ecosystem of go proa an how that could happe. i'm not ennam merred with go pro but there is a device. you put it on your head and it gives you 360 degree image. if you see a guy looking like he is wearing curlers, there are 16 on your head showing a 3-d of the world. 16 go pros on your head. i can't imagine one on my head but 16. >> that's a lot of go pros.
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that could be a little weight. >> have you ever put on an army helmet? >> they are quite heavy. >> really heavy. >> everything on the down column is related, except for kohl's. >> i have to start shopping there. my daughter likes the kohl's. that's a whipping. that's all the way back. $2 away from where it was before it had that phenomenal run when jcpenney's went off the radar screen. people said, i'm not shopping in jcpenney's anymore. >> 55 in december and now back to 57. >> i like my kohl's very much. it has that terrific pants line.
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you get those shirts for $17. not poly. >> trousers? >> they have their own private label brand. i wear them at the club. no one knows the difference. i am wearing kohl's, except they are not pink and green. >> you mentioned dillard's. that up almost 6%. 75 cents. the revenue was amid and home and furniture week. >> that's interesting. furniture was called out at positive at macy's. a lot of people were weighing in. nordstrom, major focus. neiman marcus coming back level. >> we are about one week removed now from what people are calling media geddan. right now, we have deflategate. you see that horrible drawing of tom brady. >> the sketch artist is
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apologizing. should have made him look more handsome than i did. >> it was really poorly done. by the way, talking about a poor performance, the media stocks, it is funny. you can look at the group and yet they are down yet again. sort of not really much of a bounceoff for lowe's. on last thursday's close. what a start for james murdoch. the first conference call. news corp having a good, decent quarter. >> they decided to deamplify amplify. they decided to take the visions that are googlelike and chop them. >> news corp, they did have a number that came in above estimates. the free cash flow number as well. the stock up 10%. print may not be completely dead after all. >> that's always a nice sign broadly speaking. we have a lot of pure play companies when it comes to
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so-called old media, if you will. most of them are digital. time. ginette and news corp, not to mention "the new york times." there is a lot of opportunity for whether there is a con sol day tore. >> where is the amalga may tore? looking at this stock price, maybe rupert is not done. >> i like that. >> we should probably get on the record this move by coca-cola. essentially, naming a company veteran, james quinn circumstance as president and coo essentially creating a new number two position in the chain of command. very interesting. stock is not moving. >> i don't know this man. i want to know more about him. this is a great american company that is far flung. >> where have you been?
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>> well, i was at the factory if iraq. i was cutting the ribbon of a factory in gaza. this is a man of the world. coca-cola is a company of the world. it might be one of warren buffett's. it owns a big stake in monsterment. >> your point about a global company, dollar, no benefit there. he did hedge the euro in the end, saw it coming. did anyone see it coming? >> at the same time, obviously, they make a product that people, he is trying, he is doing those studies which say if you exercise more. i have dex come on tonight, a diabetes fighter. people are very worried. there is another article today. inner city, what do they drink? mayor bloomberg had a war on coke. he lost. >> he lost that war. the pallet of dr. pepper sent.
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>> i heard the new mayor say, why did you call him the mayor? isn't that one of the jobs where you call the guy the mayor even if he isn't the mayor. >> the oil still struggling. cisco the best dow component. bob is on the floor. >> a very interesting morning. in china, that very strange press conference. got what they wanted. the market stabilized. down earlier on. the second half of the trading, everything moved on the positive side. they seem to have accomplished their goal of stabilizing the market on a daily basis. we got a modest amount in emerging markets as well. in europe, all the stuff that got killed bounced today. the carmakers, daimler and volkswagen and vfw up.
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it bounced after an ugly day yesterday. a little stability there. here in the u.s., i would call this split open here. i would say it is about 50/50 advancing. let's talk about the retailers. kohl's is sitting at a low for the year. kohl's was close to $80 back in april. this is a new low for the year essentially for kohl's. let's not quibble about a few cents. they are very emblematic of the problem with retailers. there is no revenue growth. there hasn't been for years. take a look at kohl's revenue. for five years, $19 billion. zero revenue growth for five years eve. even the same store, saves are
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not doing anything. they got 0.1% in the first -- second quarter. they have left the guidance the same. they are insisting 1.5-2.5%, same store sales growth. it in the first half, they are only up 0.8%. they are going to need almost 3.5%, same store sales growth in the second half. does anyone believe that is going to p ha. macy's said they were only getting at 1%. they are practically the best in class on this. i don't think they are going to make these numbers. it is a very tough one to pull out. if you look at the rest of the retailers, dillard's did beat and didn't change their numbers there. that stock is up about 3%. most of the other retailers are slightly to the down side. here is the pluses that we're looking at right now. we are seeing improving employment and we are seeing consumer confidence up and gasoline down. that's a big positive as well.
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the negatives are pretty strong here. we are seeing a lot of consumer shifting. everybody knows the movement away from autos. the growth in online sales. we have seen uncertain growth in europe and china. that's dollar strength, not only hurting china and hurting, for example, latin america but it is also hurting tourism in the united states. carrie lungen mentioning chinese tourists not coming as much. it is difficult to get real, solid guidance. that's why people are request he go the numbers that kohl's provided. the dow is down 36 points. back to you. >> thank you very much, bob pisani. time yet to way in to a contested situation, that being milan's bid for perrigo.
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mylan hats lowered the shares that they have to tender to succeed in taking control of the company. mylan says it is willing to take over 50% of the shares for tender that is yet to begin. what will they get? 2.3 shares and $75 a share in cash. that worth a lot less than it was not long ago. they declined dramatically since teva moved on from that highly unlikely to lead to success bid for the company. then, going on to buy the generics business of allergan. that deal yet to close. mylan fallin dramatically to $55 a share. they have a shareholders vote
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scheduled. they are going to many could out and tell shareholders how to vote. unlikely to affect it. it does appear more likely that mylan will succeed in getting the shareholders to black the current plan. were they to choose to do that, they would have to hold another vote. more specifically to this whole idea of 50 versus 80, there is, as you might imagine, a lot of disagreement from the two camps as to whether or not mylan will come near to capturing not that much sin irgies from the deal that will take place over time. let me share some thoughts from a recent one that they put out. this would reduce the synergies and ups the equity risk, the financing costs.
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it could trigger change of control provisions on some of our debt making things a lot more expensive. to counter that, mylan would say, we have a 60-day provision that we can open the tender and get more rent. people close to the situation sharing it with me as well is simple. they say this decision to go down to 50% is nothing more than a scare tactic. it is nothing more than an opportunity that mylan sees to play game theory to get chris to believe they are going to do it and, therefore, say, we have to go anyway and push them over the 80%. they believe that many of those synergies they want to get are unworkable in a solution that involves a company that is not fully controlled and, therefore, not fully consolidated. it is a somewhat complex deal to be sure. irish law is far stricter from an already share holders than in other cases, perhaps, that mylan
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might site. the key dates, august 28th. abbott has already said we will vote our 14.5% in. it is still likely to go mylan's way. then, they begin the tinder and as we move to late october, we get a sense of whether this comes in. this they are not fighting the way mylan fought teb ba. they have divergent views. perrigo feeling this severely underval und underv undervaluates it. >> they got hurt by a not so great cold and flu season. they got hurt by chinese supplements. they make american supplements. people don't even know they are buying chinese supplements. they would tell they have been
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in a price war for one of the best gross margin businesses. that could change on a dime. i think perrigo is a very valuable company. i think they should fight. the stock is too cheap. >> first order of business from mylan, get your stock price up. >> let's head to the bond pits. rick santelli joins us. >> rick? >> good morning, david. well, of course, there was a time when we were always the epicenter of every richter reading in the marketplace. we still have the biggest impacts on global economics and get repercussions from overseas, china, asia. if you look at a 24-hour chart, clearly the direction was of higher yields already established before our time zone for all the reasons in geographic areas i described. if you look at a may 1st chart of tens, notice how that 217 basically unchanged for a year, continually draws lots of trading at that tick.
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the frequency at various ticks creates lots of stability around that level. open the chart, five years, sometimes take a step back is a good thing to do. wow, it makes the move look so much different. it certainly makes 2.50, 2.5% look like it could continue to be a stopper. the biggest resistance that we haven't tested is 2.62. we are going to still with the effects. yes, it is drifting higher. notice yesterday 's low right around 96. i wish i could draw an imaginary red line and let's look at what's going on with the wand. let's keep that macro approach we were talking about when we looked at rates over 5 years. let's look at the yen versus the w yuan. use the dollar versus the yuan.
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that is much more significant. who established most of the world trade, those currencies are something to pay attention to. carl, it is all yours in the meantime, oil prices, we are wondering if they could hold 43. jackie deangeles at the nymex. >> we are seeing a 76 sent collide. 42.54, wti. the low, 42.47. where do we go from here? traders are concerned about demand, not only here in the u.s. as we come to the end of the summer driving season but also as long as there is uncertainty surrounding china, that's going to be a big issue. china takes a lot of that international oil. in terms of the levels that we are watching today, 42.03. that is the year to date, intraday low. traders are eyeing that as the next stop. even if we get a close under $43. that would be very significant as the 6 1/2 year closing low. i want to mention the fact that
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products are down today. that's why crude is tracking lower. we saw a big boost up yesterday. that's why we have been seeing that correlation between wti and heating oil. a bounce in the dollar today. at this point, down 76 cents. we'll see what happens throughout the rest of the session. we have seen some volatility in the last few sessions as well. >> yes, we have. jackie deangeles at the nymex. when we come back, morgan stanley chief equity status, adam parker. we have given back all the gains. down about five points. back in a minute.
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neosporin plus pain relief kills the germs. fights the pain. use with band-aid brand. despite yesterday's come back, the dow is down 9 of 10, 14 of 17. down 40 right now. would be a lot lower if not for cisco. we are going to get stock trading in just a moment. "squawk on the street." we'll be right back.
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they say it is still worth buying young, off badly off of china saying the breakup, the
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spinoff could still hack them. watch that stock. that has been a way people were playing china for a long time. people have walked away from it. it is an inexpensive stock. >> the worst s&p eerr. not surprising. >> it is a chinese stock. that's the chinese dog that wags the young tail. >> their other operations sort of. david novach, the old ceo should be over and over again. it is not such a great idea. the street loves it to grow. >> what's on "mad" tonight? >> we have howard schultz, part of the job initiative. strauss zelnick, next, kevin sayer. first company to be part of the
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google initiative. and ward nye, the best about residential structure. aggregates are what you have to lay down first before you build a factory or a road or an apartment complex. we'll see you this afternoon, jim. when we come back, morgan stanley's u.s. chief he can quist strategist, his reaction to china and how the markets are reacting in a market.
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welcome back to "squawk on the street." simon is off tonight. i'm carl quintanilla with david faber. >> let's get some information on inventories. >> normally, that won't rattle any cages. up .08. this is a june read. why is this so rattling? the more widgets that we make, the more.
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you know how far back you have to go to see a number? we have to go pack to january, 2013 to find an inventory build. it was up 1%. up .08. strong inventory build on the business side. june number last month of the second quarter. last month is up .03. >> interesting number. thank you very much, rick santelli. let's look at the broader market. feeling the rim effect of china devaluing its currency. there was some relief over the press conference, the rare press conference china gave to explain this move. are you spooked at all about what's happening in china? does it impact your pull ibulli.
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maybe it makes the fed act a little bit more slowly on your path. it probably benefits the consumer in terms of costs this he would incur as they shop at some of the pig stores. there are some positives in here. if you are going to have a low growth but it is going to last for a long time, that's part of it. i'm optimistic that we are in the middle of the longest expansion ever. if we have a low growth environment, it could still be pretty good for equities. >> would you actually step in and take advantage and buy some of the battered china names, whether they are consumer companies, like yum brand, wind resorts or materials and commodity companies. >> we are underweight, industrials and materials. we have been all year. we have been worried about china exposure. i am not really stepping in there yet. i think the achieveability for a lot of the companies is average.
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i think this earning season really tightened up that theme that if you are making stuff, it's not as good as if you are buying stuff. you have seen that theme through earnings. >> what about the broader market? do we need to see the dollar weaken and oil prices rise? >> no, wie don't. there have been environments in the past where we have had a strong dollar. boei both the strong dollar and that were imblemblematic. i think they are going to improve in terms of supply demand. i think it probably makes sense to start buying in the energy sector. most positive on the energy
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part. >> does that mean the fed will not raise rates in september? how does that impact your forecast? >> our house cat, which is done by our chief u.s. economist is that the fed is going to act in december. morgan stanley has long been over a year, a year and a half that the mind-set will be over the consensus view. the call is in december. they will probably be very slow after that in terms of what they can do. if you think about it from 35,000 feet, sarah, slow growth, a slow reflationary environment is not a bad back drop for risk taking. if the bottom numbers in the u.s. are achievable and the economy is going to be a little better in the second half than the first, the sentiment is clearly not optimistic about u.s. equities, that's probably a good time to buy stocks. we are pretty optimistic. we are optimistic that that's
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where we are headed. the next move is higher, a 10% move. yesterday, at one point, we went negative on the year on the s&p. there was some pretty violent selling. >> we have a view that earnings are going to grow about 4%. we are going to have about a 2.3% net buyback. then, you have about a 1.9% dividend yield. that gives you about 28.3 total base return. that's our base case. i think that looks a lot better than a lot of other asset categories i look at. we're pretty optimistic. a chance some will expand. what would make me more cautious or try to call the top of the market in a 10% down turn would be if i saw an erosion in one of three areas, economic variables, corporate behaviors or the credit cycle. when i look at the economic factors, we can argue how slow the economy is going. u.s. housing and jobs are
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improving. dellin quincys are coming doub down. not a lot of stress in housing. there is not a lot of hubris from that standpoint. you mentioned inventory. it is down year over year and down relative to sales. i don't see that as an impediment to recovery. most of the metrics, outside of the energy materials complex are not deteriorating. i better see a different path on the economy, on corporate behaviors or the credit cycle to try to make that 10% fall. >> even if we don't see that, even if we trudge along as you suggest, you use the word melt-up. that makes your ears perk up. why would you want to chase going into year-end in a year that stocks literally did nothing for the rest of the year. >> why would that happen the next five or six years. >> if relative performance is
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close to the bench weight, you try to beat that before the end of the year. ip not guessing it will happen now. i think it is something that typically happens as you get into the fourth quarter. if i'm right the bottom of numbers are a little too low, they are 119 for the s&p. we think 124 is more reasonable. that will be the catalyst to dpet people to chase things up before year-end. >> we'll see. the last few years, the difference was zero interest rates and china growing huge factors. >> there are a lot of variables that go into predicting the market. if you have an economy better in the second half than the first and negative sentiment, which you didn't have a couple years ago, if you want to romanticize that you are a contrarian bull, right now is a good time to do it. >> good way to put it. a romanticized, contrarian bull. adam parker from morgan stanley.
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the dow now down 35 points. >> when we come back, retail lows today at least. kohl's and gap in the red. is this a buying chance or do you avoid that sector? later on, a live interview with the ceo of taco bell. how does his company plan to avoid that change? in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day.
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retail definitely in focus. shares of kohl's down more than 10% after the company reported a sharp decline of profit. raising concerns over the turn around plan. macy's reported disappointing results and lowered their full year guidance. is this trend likely to continue? should we be worried about it? joining us, oliver trend, the senior analyst. we are left with this clash between the micro and the macro. the broad numbers came in in line. what is going on here? >> there are a bunch of factors. >> we think the consumer is a little bit on the beach versus in the mall. what i would say, the view from the top and interacting with the management team at macy's and kohl's. consumers are triing about going to restaurants. they are thinking about experiences in recreation,
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health care and electronics. the tourism has been painful to the new york locations. i would also say, there is a bit of a calendar shift. we have to acknowledge that labor day is on the 7th this year versus the first last year. >> investors always look askance at that, you no know that? >> it has been an issue. july has been a little weak. we have been in this tep pid environment. the back to school season, you do think about these shifts and when kids are buying goods for school. >> you have mentioned that a couple of times, that you have been on the season getting shifted later and later into the year. who does that hurt the most? >> it is the back to school shoppers. kohl's called it out today. you think about the mall retailers, which should include abercrombie and american eagle. it probably just negatively impacted the broader department store channel.
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we'll see. active has been a good trend. that's been a callout. there has been some bright spots. >> there there been a good period when it is all about your house and your car and your smartphone. what would that mean for home depot? >> i think the consumer is moving towards investing in these items and experiences and bigger tickets. we have a healthier, higher, income consumer. the name we like is restoration hardware. we think that's a name that's 100% domestic. china is on investors minds too. these are all themes. if i refocused on back to school. we like american eagle, loo loo lululemon and target. >> what about this die ver
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generals between the department store stocks. >> kate spade has been a great story. kate specifically, their distributed at a lot less points of distribution versus coach and kores. we believe that the brand has a lot of runway ahead. macy's did callout handbags as still an attractive category. we do believe this category has decelerated a little bit as there have been a little bit of lack of newness overall. kate is bucking the trend. >> who is most exposed in your group? some are purely domestic. even those companies are exposed to china and the dollar like macy's which mentions tourism. who else is exposed? tiffany? walmart has to feel it.
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>> i would call out hudson's bay, the saks fifth avenue chain, in terms of having tourist locations that matter, specially with the flagship in new york. and then tiffany would be another one. the thing about walmart, on the sourcing side with the exposure to the chinese currency, it cob a benefit, a slight benefit. prices are locked in for the fall. so that would be a ways off. spring or next year. >> finally, i'm guessing, would you or would you not take a gamble on nordstrom ahead of the print tonight? >> i think it's an interesting question. we've been. it's been totally cautious with kohl's and macy's. the read-throughs on the west coast have been pretty strong. that could be a positive for nordstrom. nordstrom has a nice higher end customer at full price and they also have nordstrom rack, a percentage of total. they have a great combination
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with this off price focus on value, high-end as well as an industry leading online business. we are recommending nordstrom. it is not a cheap stock. it is one that we think has potential to buck the trend. >> oliver, we covered a lot of ground. oliver chen joining us. >> consumer discretion is the only industry group now in the green. >> u.s. authorities are launching investigation into the former chairman of dean foods in connection with that insider trading case against phil mickelson. r.k. kelly is back at h.q. with the latest on this investigation. morning, kate. >> according to the journal, sently re-signed chairman thomas davis may have been the tipper in the passage of inside information to the pro golfer, phil mickelson, a twist that sheds a spotlight on his unexpected but voluntary departure from deans board ahead of earnings.
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the question being examined right now, whether davis tipped off information about 2012 dean foods spinoff deal to the las vegas better, william "billy" walters who shared the spinoff information with mickelson allowing him to trade dean foods using that nonpublic information. the detail is not clear. an agent for mickelson who has been approached at least two times in recent years said he had no comment on the allegations at this time. dean foods, which said in connection with davis' exit friday, only that it was voluntary and management was feeling optimistic about the company, said in a statement that it had cooperated with the government's request for information and will continue to do so, because there is an ongoing government investigation. it would be inappropriate to comment further at this time, they added. finally, a lawyer for davis, reemphasized the voluntary nature of his exit and said, also, that davis has fully and without reservation, cooperated
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with the sec for alleged insider trading. he has no knowledge of any material, nonpublic information about the company being communicated about i walters by anyone at any time. >> dean foods has had a tough year so far this year in the stock market. the stock market down about 12%. a lot of moving parts in this case. very interesting development about the recently departed nonexecutive chairman if true. >> thanks for the update on that one. coming up, a record year for mna. investment bank is taking advantage. the stock trading higher in public debut. recently opening. up 6%. the ceo will be joining us live at post 9 right after the break.
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jackie's heart attack didn't come with a warning. today her doctor has her on a bayer aspirin regimen to help reduce the risk of another one. if you've had a heart attack be sure to talk to your doctor before you begin an aspirin regimen. fresh from the opening bell, we are joined by scott viker from houlihan lokey. it came in below previous expectations. >> we are very excited. we wanted to get public. we are public. we are one of the few companies
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that got a price out in august. the stock is doing well this morning. we are very happy for our investors. we are in good shape. >> make the case to new investors as to why they would want to own these shares. >> a different company, a very diversified business. with he do well in good markets, bad markets, overseas, across all sector lines. we have a good story. >> i have known your firm for a long time. i always remember distressed. that area not particularly active right now. it does typically follow the bus cycle on mna. what is the cycle? >> we continue to grow in the m&a area in the mid-cap focus. our restructure in business is doing well. we perform receive interest rates will start climbing. the oil sector is going to be a lot of work. there are opportunities. >> do you expect this feverish
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pace of m&a to continue? >> we expect everything we are seeing in terms of pipeline that it is going to stand strong. >> how much is the business of the m&a advisory to david's point and your point that you do well in good times and bad? >> last year, about two-thirds of our business was focused on m m&a, the healthy parts of the market. a third of the business works on distressed transactions. >> i'm looking at august. $120 billion in u.s. m&a. the busineest ever was 170. >> part of it, we are in the mid-cap space. it is such a large field out there. there is always people needing to do transactions, nothing to do with interest rates in the marketplace in general. we see growth in our
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marketplace, not only from what's happening in the industry itself but just transition of own ownership of businesses. restructuring business itself. >> could you quickly toggle back to it being a larger portion of your revenues should it start to be a larger part of our daily marketplace if you will? >> what we described is we built a great bear, bull model. it will work great in bull markets and bear markets. seven years ago, our restructuring part was the leading part of the business and the corporate finance was much stronger. we are balanced throughout all the cycles, which has enabled us to retain great clients and employees. >> you have seen the cycles. >> i am curious to see how long you think we are on the m&a cycle? i realize i may be talking more about large cap as opposed to
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the areas you focus on. people seem to be concerned we are getting a bit topee in terms of multiples. >> that is more of an issue at the large cap. in the midcap space, we have not seen any slowdown. still a lot of activity. don't see anything short-term on the horizon that's going to change our business plans going forward. >> on the restructuring side of the business for a moment, back to the distress part, where are you seeing the activity? are you seeing it in energy, for instance, right now? i would think those companies need help. >> always certain industry sectors in oil and gas and commodities and shipping. we see in different parts of the globe. not all companies are operating. what about retail? >> retail has been pretty strong, not so much on the restructuring side for us. we've seen cycles where retail has been more problematic. previous cycles, telecommunications an real estate. areas of different industries we
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have been able to work in. >> finally, how does your life change as a public company? does having a currency allow you perhaps to think about acquisitions? >> i think our business has been built to eventually get public. it took us a while. we are finally here. it is going to be great for the brand recognition. we are a business that a lot of people have only known a piece of us. we had a chance to tell our story. it is going to go great. it is going to help us with investors, with our clients. our employees are thrilled to be publicly traded now. >> if you do get into m&a, you probably know some good advisors. >> priced below the range but doing very well in the aftermarket. >> a bit different than some of the ipos we have seen recently. could china's moves to devalue the yuan this week mean that a rate hike is less likely? >> a global adviser will join us. dow is down about 42. we're back in just a moment. mornings.
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wonderful, crazy mornings. we figure you probably don't have time to wait on hold.
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that's why at xfinity we're hard at work, building new apps like this one that lets you choose a time for us to call you. so instead of waiting on hold, we'll call you when things are just as wonderful... [phone rings] but a little less crazy. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. good morning. i'm sue herera. your cnbc update. a massive truck bomb ripped through a popular truck market in a predominantly shiite naebhood in bag dag. killing 67 people, injurying 152 more. it is one of the deadliest in years. the government says the death toll from the huge blasts at a warehouse for hazardous chemicals has risen to 50. more than 700 have been injured,
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including 71 in serious condition. the fire from that explosion is mostly under control. a section of the new jersey turnpike has reopened after a fiery crash involving two tractor trailers in the central part of the state. it gusted both trucks and backed up traffic for miles in both directions. luckily, the drivers only suffered my yinor injuries. a new york sketch artist is apologizing for her courtroom sketch of patriots quarterback, tom brady. it has been criticized by many. jane rosen burg admits she doesn't tend to flatter people and make them look good. that is the cnbc news update. let's get over to jackie deangeles. >> the department of energy out with the weekly nat gas storage report. an injection of 65 billion cube it feet. a larger than most. we are looking at prices at 284. they are coming off from the highs that we saw this morning. what's interesting to note about
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nat gas is that this is a backward-looking number in terms of the stocks. in terms of usage, west coast saw a very small build which shows you that is moving inline with the weather patterns that we saw over there. much hotter. expecting that hot weather to come this way, to the east coast, in the next ten days. we do look at the weekly continuation chart. the range, 272.5 to about 294. traders are saying this has to pick a direction either way at least for the time being. it looks like it is lower. back to you. >> thank you very much, jackie deangelis. looking at the broader market, under some pressure. china allowing its currency to weaken against the dollar for a third day in a row. it raises all sorts of question about the death of china's slowdown and how it will reverberate. joining us is pimco managing director and global economic
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adviser. >> good morning, sarah. >> you wrote your first piece on the three gluts. let's start with china. that really is the center of the universe right now. are you worried about the ramifications of this uchlt u-turn in terms of devaluing the yuan or are you calmer about it? >> i think there are some reasons to be worried. two major economies in the world that were willing to let their currencies appreciate. that allowed the rest of the world to export their deflation. these two were the u.s. and china. china just decided to jump ship on monday. i think china has now started to export its own deflationary pressures to the rest of the world. i think that gives reason for some worries. >> how far do you think they will let the yuan slide? >> we have now seen a 4.5%
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deflation. i don't think the buck stops here. we will see further devaluation. my best guest is something leak a 10% r&b depreciation. >> you do think we will see the 10%. the pboc in the news conference last night seemed to say those predictions are overblown. you think 10% realistic? >> it is, because the market is pushing the currency lower. they don't want to be seen as encouraging that move. they are trying to stem against it. they are trying to make it smoother. eventually, i think what china needs is a weaker currency. its exports and the overall economy have been sagging. they are now allowing the market to take the currency lower. >> does this take september off the table for the federal reserve to raise interest rates? >> i've been in the september camp for a long time. the main reason is that the domestic economy looks good in
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the u.s. we had reasonably solid retail sales this morning. the labor market has made further progress. there is now at least a question mark over a september move. the reason is, inflation ought to be more precise. the lack of inflation. i don't think the fed can be reasonably confident any longer to use janet yellen's words, reasonably confident that inflation will go back to 2% reasonably soon. i think that raises a question mark. if the dollar keeps appreciating, the r&b -- if the dollar keeps appreciating and the r&b keeps depreciating, the fed may be forced to push back that first rate hike. the key is the domestic data. we still have one labor market to come. i think september is clearly still on the table. there is a question mark over it. >> lockhart has said he can envision a scenario where you
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hike, way to meeting, maybe hike again. what is the longest reasonable period that you can imagine where they move and wait to move again. >> i think the reasonable expectation is that they move at every other meeting. but, as they say, they are data dependant. i think this would be a very gradual move. once they start, they will pause and see and wait for at least one or two meetings, to make the next step. >> overall, when the rate hike comes, i think it will be very gradual. they will go out of their way to make clear that once they hike, that the path will be gradual. that's much more important for markets than the timing of the first hike. >> you wrote about the oil glut. you used the word deflation when talking about the chinese currency. given what we've seen, the scope and the size of these moves and commodities, what is the inflation outlook globally and
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for the u.s.? >> i think the skrooutlook for inflation globally is that we still live in a low flags world. inflation is about he low target almost everywhere. we have seen commodities falling. headline inflation will stay very low in the near future. for the u.s., it is a bit different, because core inflation now looks as if it is creeping up very slowly, very gradually. the u.s. is the best of a bad bunch. we see core inflation rising. core cbi is at 1.8 already. we see over the next six to 12 months it will go back to 2 and slightly above 2%. for the rest of the world, we are still in a disinflation or low flation environment. . good to see you yakum. coca-cola has named a brand new president and coo. this is the first time coke has
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had anything like this in a few years. it is widely presumed to be a successor to ceo mutar kent. mutar kent and james quincy, previously in charge of the european operations, held a conference call this morning. he was on it before squawk on the street began. both gentlemen were speaking. the first question was, is this a signal you have a successor in place in the name of james quincy? here is how mutar answered that question. >> i think its inappropriate to speculate on coo succession. we are fortunate enough to have great leadership and a rich, diverse team of executives that are focused diligently on running our business around the world and laying the ground work for strong leadership and management for years to come.
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>> it may be inappropriate to speculate, speculation is that mr. quincy will be the successor. there was another name floated, ahm ahmed bogier. there was word that he was going to retire and leave mr. quincy as the front-runner. the back drop of all of this is that soda consumption in it country has been declining for the last nine years plus. diet, coke's number two product has seen falling sales and sharply falling consumption. i asked james quincy how he feels about that and how he plans to turn around and take on those kind of challenges? >> europe, diet drinks are growing faster than regular soft drinks. both are growing but diet is growing faster. as science comes to bear in the
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u.s., i think we will see the turn around of the category if a great brand like that, coke. that will allow us to further extend what we are already achieving. i think the recovery of diet coke will only add to that. >> playing down some of the concerns specifically around aspartame. pepsi is going in a different direction removing aspartame from diet pepsi. it doesn't have as much to lose. diet pepsi not as big of a product as diet coke. that was the first time we heard from james quincy, the man that is go to go the number two. we will see how long muhtar kent stays on. >> they say don't make assumptions but how can you not. >> another question is, does pepsi have a successor? the industry is facing head winds. both ceos have been there for a
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few years. >> when we come back, back when trade embargo first began, the country seized billions of dollars worth of american properties from the likes of g.e., coca-cola and jpmorgan. what happens to all those properties now? we'll give you an inside look. we're live in havana when "squawk on the street" comes right back.
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what is the high-yield market telling us about the stock market? that is coming up next. more "squawk on the street" coming up next.
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no sixth grader's ever sat with the eighth grade girls. but your jansport backpack is permission to park it wherever you please. hey. that's that new gear feeling. this week, filler paper and folders just one cent. office depot officemax. gear up for school. gear up for great. >> properties of american companies like ge and coca-cola were seized by the cuban government more than 50 years ago. what do they look like now? michelle caruso-cabrera live with that story. >> reporter: when those properties were seized, there was a whole process in washington. they were certified, assigned a
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value. the u.s. government says, that's how much the cuban government owes you plus 6% ever year. let's show you some of them. the first national city bank of new york, you know it as citigroup. a beautiful building in old havana. u.s. certified claim, $27 million. next up, western union, now the cuban telephone company, u.s. certified claim of $4 million. you see a big line out front there. those are cubans lining up to refill the minutes on their phones. you were just talking about coca-cola. the headquarters of coca-cola, painted red and white for the cuban flag. that u.s. certified claim is $118 million. the sears department store. it must have been a very pod dern building at the time. it is now a computer center, u.s. certified claim of $16 million. g.e.,great location on this g.e. property, now empty, certified
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claim, $25 million. here is the issue with certified claims. for the u.s. embargo to be lifted, one of the conditions in it is that these claims must be settled. i asked john kerry about this when he spoke recently at the council on foreign relations. >> for the embargo to be lifted against cuba, the law requires that u.s. claims against cuba be settled. what's your position? should the law be changed or the claims be settled? >> we are already talking about claims. claims are going to be part of the ongoing diplomatic discussion. it is very much on the table in the context of the normalization process. >> we have shown you all these corporate headquarters. there are a lot of american individuals that are keenly interested in trying to get a claim on their property back. most of the companies that we have spoken with said, look, we would rather have market access instead of getting the actual building. back to you. >> thank you very much, michelle caruso-cabrera in cuba. >> let's get to the cme group in
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chicago. rick santelli at the santelli exchange. >> thanks, david. i would like to welcome my buddy, john brady. 22-year veteran of the business. let's start in the chronological order of recent events. china. do you think they did very well when they started to deal with all the needs of their economy like rare earths, commodities, resources? >> absolutely not. they have hoarded commodities. there is a global glut. you hate to say it. if you look at the exposure in new york city, one of the major chinese port cities nvmt addition to the chinese economy blowing up, that maybe they are blowing up their commodity fl s supplies? >> what is the best system tole allocate scarce resources? >> the free market. >> i rest my case. they are really tinkering with some levels with regard to foreign exchange. the recalibration in my opinion is going to rattle markets for a
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while? your thought on trend. >> that's exactly right. not so much the devaluation but the lack of transparency by the pboc. consider how they handle policy decisions as opposed to the fed. the fed is much more transparent. that has dampened volatility. i hear that many people are in prison in communist countries. do you believe the unemployment rate is 5.3, really believe it. >> i do not. >> how important is that number for the fed? >> the fed has anchored their ship to the unemployment rate. they have constantly moved the goalposts over the last five, six years. the belief is it is between 5.0 and 5.2%. the challenge here for the fed is that we get to 5.2 or 5.1. wages continue to flat line and do nothing. they once again take another chink off their credibility with
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the market. >> the way i would look at it, when it is under 6%, maybe they should start talking turkey then. in our final minute, we are going to go to the main topic. quantitatively, the best argument to view the fed activity or no can activity in the future are earnings. >> average hourly earnings. it is a big number for the fed. i think that investors want to keep an eye on this. in the year over year series over the last seven years, we have bumped off the up 2.3% levels a number of time. the august of 2014 number, which was up very strong, up .03% is going to fall in the year over year series. the base effect is going to effect next month's number on september 4th. that's arguably the last large important data point for the fed. just to keep average hourly earnings year over year at up to 2.1% currently. monthly urges are going to be up 0.3. if they drop below 2.0, the fed
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may punt it to at least december. >> excellent. i like quantitative tire kicking. thanks, john brady. >> sarah eisen. >> as the dow goes positive in a narrow range. up next, the ceo of taco bell goes live on the company's global expansion and competing with the likes of shake shack and chipotle. we are back after a quick break. ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus...
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yum brands, a company we talk a lot about, has been struggling over the last few months, issues of china front and center. one yum brand that has been a bright spot is taco bell. sales boosted by breakfast food and new menu innovations. joining us is the ceo, and to talk about the new initiative a nationwide effort. talk about what you're doing as far as yum brands overall's global troubles in china. interestingly taco bell is not in china. unlike kfc and pizza hut. how are you driving strength domestically as a stand-out in this portfolio? >> well yeah, the taco bell
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business has had tremendous momentum. we've had some really exciting product innovation. you mentioned earlier. our breakfast program. most recently, we're doing these daredevil loaded grillers. which is getting rave reviews. we've been on a streak of i think hiring great people. to run our restaurants and having terrific food innovation across all the day parts. we've become a real leader in the social media space. with these young consumers. which you know is the reason why we're here at this 100,000 youth initiative. >> yeah, no i know you're winning on digital and considered one of the leading digital marketers the on the menu for a bit, with all the innovation and the breakfast roll-out. mcdonald's is considering doing breakfast all day and mcdonald's and wendy's are talking about new versions of value. can you talk about the competitive pressures in fast food? >> well, look, you know the thing that's great about our
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industry is it's very dynamic. and you know, we won't be doing breakfast all day. because to just continue. to continue to win, is continue to lead on value, continue to lead on innovation and i would argue like right now we're doing these daredevil loaded grillers for $1. i'm not sure there's anything out there that is as exciting for $1 that can you get right now. as a customer. for dining out and that's really been our formula. which is listen to our consumers through the social media digital space. just being out in our restaurants and then coming back with food, that i think is very much connected with the culture and the lifestyle that they live today. and i think that formula is going to continue to work. it has worked in the past. it will work you think going into the future. >> david is licking his lips. >> i notice in your latest
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quarter, your division was the most, had the highest operating margin and had the most increase in terms of percentage point operating margin, 29.5%. you start to see wave pressure as a result of various efforts around the country as a result of trying to increase the minimum wage. >> obviously inflation is part of our business, it's something we deal on the food, it's something we deal with on labor. we're always forced in a scenario to get the best employees to pay whatever the market is asking us to do. so we have those pressures constantly in our business. obviously we're going to have those pressures going forward. the thing that we stay focused on is getting rid of the cost, that frankly our consumers should be paying for or that we've become more effective or use technology to get rid of all of those costs and where it makes sense, innovate on new items. so people continue to be excited about the brand. >> brian, we want to ask you about this jobs initiative. as we look at the unemployment
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charts, youth unemployment, between 16-24, we have 5.6 million people out of work. why are some of these teen unemployment rates so many more times the national average? and what are you doing about it? >> yeah well it really is, i think an issue that i'm delighted that everybody is deciding to tackle. this is something that we've been focused on for a while. we're a brand where a lot of people have their first jobs. i think frankly, part of the problem is these young kids no longer really understand how to go about getting their first job. and i think these groups of people coming together, to help the kids understand how you get your first job. what does it take to be prepared. so that you can go to work. is really important. you know look, this morning i had the opportunity to meet about a dozen kids that were waiting to interview. and they're spectacular, all right? they frankly just need a little direction on how to pull together a resumé. how to get a linkedin profile
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set up and we're delighted that we're going to be able to help them get into their first job. i think more companies should be investing in you know the future leaders of potentially their companies. as well as our country. >> thanks for joining us today. brian, to talk about that and other initiatives. let's send it over to jon fortt at the samsung event in new york for a look at what's coming up? >> on "squawk alley" at the top we're going to have some news that's coming out of this event. there's more to it than just samsung pay. also we'll continue to track the reaction to china markets and finally you might have heard apple's ceo tim cook has invested in water-efficient showerheads and i don't mean he went to bed, bath and beyond to get some. here at td ameritrade, they're always working.
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