tv Squawk on the Street CNBC August 9, 2017 9:00am-11:00am EDT
the other and then my own team that shows them the social media, the blistering social media, you have no idea how you can read it. you do, you're obviously signature here it's brutal. >> thank you for being with us. >> it's been so much fun. >> the diversity of conversation here makes this show amazing think about all the guests we had probably 30 or 40 since have been here it's been wonderful. >> it's been a pleasure. >> you made it wonderful, mr. wonderful. >> now i have you wearing a jacket andrew. >> it's a big mistake. >> that does it for us today make sure that you join us tomorrow right now it's time for squawk on the street. >> good wednesday morning and welcome to squawk on the street. some flights to safety this morning as we watch developments out of north korea and
washington futures are down both fell more than 1% overnight. europe is down by as much or more ten year yield falls below 222 that's a six week low and we'll get oil inventories. our road map begin with saber rattling futures in the premarket have been rising con sering con sern. >> north korea threatening preemptive strikes against the u.s. president trump threatening fire and fury. >> disney anoungs it's own streaming plans for espn and other content. the united states and north korea sending global markets lower. kim jong un threatening to order a missile strike on guam now as the president warns north korea it would face fire and fury if it continued to make threats to the united states. stocks did fall snapping the dow's ten day win streak
this is not like crossing a parallel in the early 50s. the natural thing to do is to raise cash and that's what people are doing they're selling stocks that i think across the board so it really doesn't matter what they're selling. it's not like they're on any particular group we haven't had this kind of sell off in a long time where it's like just raised 10% just get me 10% more cash. that's why you saw what happened in the afternoon i think you're seeing it this morning. some of the stocks that are being hit obviously linked to disney but people will try to assess whether rex tillerson is right and the president is right. >> say an american can sleep well at night? it's not an imminent threat to the united states. >> you know, fire and fury, it
gets walked back general mattis walks it back and tillerson walks it back. so you just say we know our president is giving hyperbole and other people are not and the one thing that's not great is the north korean gentleman is a little less rational than even the president when north korea invaded south korea. >> right listen i'm no expert in geopolitics. i'm sure we'll bring a number of them on to give us their sense here there seem to be no good alternatives when it comes to north korea. that's the consensus of the national security community but if you're an investor i can assume you'll say risk went up a little bit. >> risk went up. i think that you would say,
okay it's time to buy gold and really rachet back exposure we're not seeing that. >> gold is up almost $18. >> gold has been terrible for this. >> classic sectors that rise. >> lockheed martin is a big winner they came out today and they say look, you know, we're getting a lot of inquiries well, no kidding when you're involved going after guam you have to have a lot of missiles so lockheed martin is the natural play but that stock is being held up. >> if you haven't gotten up to speed yet on what the story is this morning let's get to more on the north korea situation. >> good morning, the president making those fire and fury comments that you're talking about yesterday and this morning
following up in a series of swee tweets regarding america's nuclear posture he said it's now far stronger than more powerful than ever before hopefully the president says we will never have to use this power but there will never be a time that we are not the most powerful nation in the world meanwhile rex tillerson landing in guam today after the north korean threats to take military action against guam. this was always on his schedule. not a specific response to the rhetoric in guam the secretary of state giving remarks saying the fire and fury comments were simply speaking the same language that north korea speaks. >> so i think what the president is doing is sending a strong message to north korea in language that kim jong un would
understand because he doesn't seem to understand diplomatic language i think the president wanted to be clear about the u.s.'s unquestionable ability to defend itself and will defend itself and it's alabama lilies and it' important that he deliver that message. >> also saying that americans should be able to sleep well tonight and saying that he's not seeing any change in the military posture between the two countries. so nothing to be concerned about. >> we'll see how much of a comfort that is. we'll talk to you in a bit. >> look, tillerson makes you feel like it how does that relate to it some of these companies are classic plays so it's not like we won't see it up in the
morning and then maybe level off. we all know that money is not going to be top of mind. >> speaking of crisis what about disney >> disney shares are are down in the premarket. quarterly earnings did meet expectations revenue shy of consensus the company will stop providing movies to netflix in 2019. heres bob i fwrks ger on closin. >> we had an option that gave us the ability to move them to somewhere else starting with the calendar year 2019 slate that's what we're doing. we're creating a disney branded service that will have those
movies on it the 2019 slate includes frozen 2, toy story 4 and live action remake of lion king so it's an incredible slate. >> this morning the journal calls disney the biggest cord cutter hollywood has ever seen and as you pointed out it's going to cost them some money. >> yeah, they had to do something but this is the first time where the narrative was not, you didn't get -- there was not a push our theme parks are so strong. now it's hey stop ignoring we have the delivery system. we don't need netflix. all it wants is a hail mary pass. >> it has that feeling and i think it's being met with mixed reviews in the investment community this morning no doubt about it. a direct to consumer relationship is not something that disney really had something that netflix has and
then there's the larger question as we continue to watch the taking apart of the traditional bundle and we have talked about it so often, what is the consumer at home going to do how many things are you going to subscribe to we also have a direct consumer offering cbs also had success with all access you're going to have disney how offering you espn. although not the best content and maybe then also a number of movies and disney specific things on a separate direct to consumer offering. i don't know guys but i don't know what you do if you're at home and you're trying to figure out how to subscribe and have it be fluid on your tv. somebody has to come up with that. >> i have. >> the old video package is starting to look better and better. >> it's called comcast and you get it and it's got everything it's terrific. it has all of these channels you can do the xfinity too
it's great it's like, i don't know, it's a mosaic i mean, how many things can we subscribe to. >> but you're already paying for channels you'll never watch. >> there's convenience issues there too though. >> there's going to be an ease of use issue it's one thing if you have bundles that really do meet your needs and maybe that will be the case maybe does sisney is going in om of them and will continue to and won't need to have as much of a direct to consumer the other question is the cable companies. people think wait a second broadband is the key product always been the key product. a lot of people starting to run the numbers. 10% decline. how much do you have to raise your average price on broadband to make up for it. >> not that much
>> $5 will give you the cash flow. >> this is millennials they don't start with cable so at the can layer on but it will be interesting i think they're more niche oriented the millennials. millennials are like, they're like thermonuclear war. >> that baby is never going to have cable. >> that baby is never going to have a car to drive. >> no. >> that baby isn't going to drive a car. >> right so i mean, i look at it -- exactly, how much do really need and i think that we're roling the dice and saying we're not getting them anyway. we're not getting them anyway. >> now the more investment, what's the likelihood that this makes it more likely that they do buy netflix >> i think one of the things
that he, he's a little bit of a visionary. why was he spending all of this money developing independent programming. >> everybody was going to start pulling from him. >> thank you. >> they're going to have a lot of pressure to keep developing hbo still has the film deals to develop programs people are going to want to watch. >> they're good at that. >> they are good at that but there's only so much great content out there and jeff besos has a great deal in hollywood these days. >> you have amazon already you have netflix there's a great question on the conference call about is this a better deal than the 7 or $8 to cable and iger says yes of course it's a better deal but koim back ai say do i want all of that programming? yes if i'm at the mid american conference and playing a soccer game. >> maybe you do. i have underlying numbers here a bit of a hit to eps.
netflix going away, discounted cash flow models because that's a good amount of money that they get from selling that programming to netflix so line by line it wasn't the greatest quarter. it's down four out of five quarters. >> it's not a growth stock if your numbers go down it ain't going away. but you need a reset where you just say okay look this is going to happen forever or you do what he did which is in three years we're all going to make this move in three years. >> everybody is thinking long and hard on what they need to do and i think we're at a point now based on conversations that i've had where at least the idea of doing deals and doing something bold is more likely i think. >> they have to. >> than it has been in the past. >> do you think netflix is in play
everybody is in play. >> netflix doesn't have a controlling shareholder. netflix is available you can buy it right now >> what is snit 25 tlrs. >> of course but you can get it for 100 billion dollars. that's all. >> for a descent premium on that baby. >> do you think facebook is laughing it's way all the way to the bank facebook has that novel method of content creation. >> always comes back to the zero inventory and free content. >> it's like they have fewer games. i don't want that. >> i love your post but some day i might prefer to watch star wars than read about what you had for dinner. >> god love you. >> you saw my wife making that corn salad you didn't think that was a dynamite picture come on. that was a great picture and then that sky picture my daughter put up in ocean grove.
>> i know. >> you don't think that's worth something? i'm going to charge $1 approxima approxima$1.50. >> i need a chief content officer. what i need when i need it. >> my life is completely fulfilled. >> i have 7 people that tell me what to do >> when we come back we'll get a lot more on disney and later on venture capital roger mcnamee will tell us why he regrets investing early in google and facebook. take a look at the premarket flights to safety all around the globe. fureardo 'rba ia ments e wn ritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool.
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peace in our time among the burger companies they're all doing well, red robin, wendy's, mcdonald's, burger king, burgers do well there's a pizza war but there's burger peace. >> global komcomps, actually no american comps 2-3 flies in the face of star bucks today. >> i know. easter brook deserves praise my charitable trust owns starbucks and not mcdonald's but in the interim they have to do a guide down when they report next and that's what the report is really subtly saying it will be a guide down and when they do a guide down then the
stock will get heavy. >> you're not on board with the line that specialty beverage growth maybe nearing saturation. >> no, if you have the right -- it's like michael kors yesterday. if you have the right stuff you can make it. now look when you criticize a stock that's like saying you don't understand we always figured it out and we're going to figure it out again. my problem is the guide down figure out because when you get the guide down there's always someone that says i can't believe they just guide down and that's the problem i can't believe it bob iger didn't guide down >> he is a double grade american let's not forget that. >> the hail mary pass gets caught, okay >> really? >> it does >> didn't you ever see rudy. >> hamilton in the end zone, baby.
>> >> it was caught and he wince in the end but he has to throw it and that's okay >> it's important story for an industry we covered closely. >> it's a great discussion disrupt yourself i think they're disrupting themselves and that's smart. have you ever talked to them off line they're great. i was having trouble and they said it's a long season. don't worry about it. >> we're having a heck of a year l miteget back in a nu althe decline in the dow futures now. we're back in a minute
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this is where airbnb is finally impacting it because it's a whole ecosystem that's doing well. >> it's obviously not in their platform. >> no. >> they always relied a great deal on europe as well. >> the international is incredibly strong. i'm saying take a breather i wish it would become public. >> it will eventually but it doesn't need to. >> let's be careful. >> we do. >> mccormick to pay for frenchs. >> wow. >> too many sec darius. >> we'll take stock. >> all right we got an opening bell coming up a lot more to talk about including all the implications still of the disney move from yesterday and not to mention, well, some of those equity offerings that you just named. so we'll be watching all of them we're back after this.
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obviously some risk aversion in play with the stock markets in japan down. gold is higher yields are higher. raises a question about what happens to other things we were talking about. tax reform, right? infrastructure and things that, hopes that the market can depend on. >> boy that stuff just seems to be, i don't want to say total back burner because what will happen is he'll come out and say something good and the president is on vacation. >> working vacation. >> i almost left that word out that would have been right to twitter but i don't hear a lot of discussion about behind the scenes really working hard to get something done do hear about all the different loopholes this is america. we're a loophole country. >> that's the only way they'll be near getting something that's
deficit knewel tral neutral or t being. that's going to be more and more important. counting down already. >> those doubtful are not at all confidence that we're going to build this year 74%. >> oh, really? that's big. >> empowering families of fallen heros at the nasdaq winners of the texas venture labs investment competition >> it's quite a run. reed hastings is not going to respond to this. marvel is a lot of people's
favorite programming that was not taken off the list. i really think that netflix is the one that has the key to this market if you ask me. >> really? >> yeah. that's been the great area everyone loves those stocks. disney at a certain point you have to buy. you just have to have faith. >> you have long said disney is the stock you buy for your kids. >> i'm not going to back away from that. the theme parks. can i just say the theme parks are great. the characters are great so it was a summer lull. you have to do something you have to do something do either of your kids have cable? >> no. >> i mean my younger brother, 35, no cable. >> my brothers don't have cable. >> i have been demanding that they put in cable but that would mean watching my show and that's about the last thing they're going to do. >> netflix is going to have a base of 158 million worldwide subscribers by the end of 2019 158. >> they're going to have 55 million. >> disney is going to start --
yeah, yeah. >> disney is going to start from nothing. >> the great american did it >> espn's revenues are two times that of netflix in the u.s. >> that's pretty good. >> that's not bad. >> but the paid tv ecosystem works well and has created an enormous amount of value for these companies and it's starting to fall apart slowly. by the way, most of the sub losses and video are from satellite. not cable, satellite you don't even have a broadband there. so far we haven't seen the impact on the comcasts of the
world. >> they're saying we have to have short-term leases in the mall and they talk about how gymboree brought them a lot of business just a fantastic disposition on the problem with the mall. amazon, netflix. >> i loved the conference call it was so good i loved it they're teaming one google it's incredible. we didn't even talk about the memo i'm furious about the memo still. i know that doesn't make any
money. >> front page of the new york times think. >> stress in women anybody that ran a tragd deding -- desk knows that women can handle it better than guys. >> >> i read heart of darkness. >> that's the one they always tell you to read. >> you have to read victory. >> victory >> yeah. >> i need you to put together a reading list for me. secret agent. >> i did read that actually. >> secret agent is fabulous. >> financials are getting hurt i assume this is going to weigh on yields. expectations for rate hikes going into year end, right >> great american interview, wilfred frost and jamie dimon. >> selling the bank stocks to me, i'm not getting that yes we get a great job number i
just don't think you need to sell the bank stocks that's not where you should be selling. >> because of this notion put forth this week that dereging along increases dividends and buy backs. >> yes and we have great credit card numbers i love what mastercard and visa are doing. i did a piece of the credit card companies yesterday. and others are better to sell. you're going to sell bank of america 24 so you can buy it back at where? in where would you buy that one back it's not expensive here's what you should be selling mylan. that mylan quarter. >> yeah. >> terrible quarter. >> which was worse.
>> those are all first sell offers you're not going to refuse myla nar mylan has core business to it. those are hail mary passes left and right. >> mylan should have taken the teva offer and perigo should have taken the mylan offer. anybody should have taken any offer that was made when all of these guys were talking about consolidation. >> teva has a business, mylan has a business but the problem is they come in and cut numbers and you can't, you cannot survive or number cut in this environment. market isn't going to let you. mylan, wow. >> looking at all the major media companies, of course disney is down, really it's not that significant a decline viacom is down 2.5%. >> viacom. >> yeah. just the way you even said it
was insulting. >> it was. >> whoa. >> sixers going to win 50 games. i trust that process. >> no, you're getting ahead of yourself 50 is too many. >> i thought you'd be happy. you didn't even follow him. >> i'm done. what can i tell you? it was a horrible baseball season. >> you and me we'll go to the mall national past time. >> that's what we'll do? viacom, a new 52 week blow >> apple up. companies with cash have a lot of opportunities. >> the sell off s that the indiscriminate selling you described at the top or is this disruption and nobody knows who wins in the long game. >> it's both i think that disruption will bottom and i think theed idea of the global crisis. >> i trust tillerson and mattis.
our president is a tad bombastic. a tad. what would scaramucci said as communications director? >> i don't know. we'll never know. >> maybe it's best if we don't. >> maybe. >> quickly, southwest was up 6, jim. we talked to him. >> yeah my charitable trust owns it i wish i had just nailed him i love gary. he's the best. but i think southwest is great it's warren buffet's airline warren buffet's computer company, ibm. >> he's teselling. doesn't that say a lot. >> yeah. >> southwest air he loves and i don't think he's back agoway they do not have the price
competition but they hurt themselves with that edge. i have to tell you there's companies hedged against the euro that was a mistake notice how once again these future sellers come in and keep selling at 50 but i think southwest air is a buy got a conference call today. i was going to recommend it for action owners club members but they're stealing my thunder. who sells citi here. what fool are they. >> what kind of fool am i. >> what kind of fool >> dow is down 54. a good composer as well. let's get to bob. >> that's right. $7 on the down side. this is on north corey wkorea.
france germany down side right across the board the dollar is a tad strong cher is interesting and should help a little bit and germany is off of the lows here in the u.s. it's defensive and yield plays buy and large. energy is up utilities were up and they're down now and that's a yield play the banks are down as ten year yields are moving to the down side as well as the two years. consumer staples there's your defensive play overall the other reason we're down and it's a small reason but it's noticeable that a unusual string of rotten earnings in the last 24 hours disney, mylan with a miss on the top and bottom line. price line we talked about here. their comps were terrible. zillow was underwhelming we had bad numbers and it effects on the markets
we're waiting for retailers to report the final piece of the second quarter puzzle and they're all a little bit weaker today however they have bottomed in the last five or six weeks. so some people are hopeful we did see numbers earlier from michael kors so macy's up fractionally, nordstrom, kohl's and jcpenney are all up double digits since the beginning of june and that's a hopeful sign meantime the marks are at new highs and i keep getting calls from my wall street friends that keep getting laid off. and yet wall street keeps laying off people 2011 to 2012 the first quarter is down. it keepsdropping every quarter there's a number of things going on here. you have the decline in volatility but this is a
worldwide phenomenon down 41% europe down 50%. japan down 62% it's a very real phenomenon and what it's leading to is much lower trade volume they get paid on trading volumes. these are total trading volumes in the equity space down 6% year over year. europe is down 13% japan trading volumes are are down and this is a major issue here people are getting laid off because of this and obviously people trade careers for other spaces they're still hiring on wall street but not hiring analysts and traders. and computer geeks i talked to one of the biggest
market makers in the world i said who are you hiring these days we're hiring physicists and that's a very good comment on the state of wall street today new highs but still people getting laid off on the street >> well, you can add altice to the list of companies trying to buy charter communications they're working on an offer to buy charter communications but have not yet brought a purchase proposal to charter or it's advisers according to people close to the situation there's no guarantee that altice will engage though the prospects seem likely. they have long had ambitions to expand in the u.s. and with softbanks recent interests drahi decided to see if he could compete. bankers and lawyers working a bit for charter but it faces
significant hurdles in crafting a deal that would meet shareholders expectations on price soft bank has also been struggling on an offer for chaert though it's unclear if they can come up with offers that meet the price objectives of charters manager or liberty media that controls 28.5% of the company's equity and 25% of its voting shares both softbank and altice are hobbled with a perceived inability to craft deals with a large amount of cash they're unafraid of taking on vast amounts of debt to fuel their ambitions but it's not clear if charter management or john malone has interest in a deal where they give up to a new
company reliant on chart tore pay down the debt. alabama gattis has shown a unique ability to cut costs and vote that suddenly and cablevision. still liberty is war ri in the brief that it's too early to tell whether they are sustainable and while he does like to craft deals tax free in nature liberty's enormous gain on its charter stake that could approach $20 million in deal might lead a new cash come poen in the consideration charter with 60 billion in debt and a purchase price that could reach or exceed 500 dollars a share would represent an enterprise value of 200 billion. while altice operates at higher levels of leverage than charter and would add to the cash flow
they're still not nearly enough to fund a unit whether either can bring in significant equity investments from outside parties that would allow them to increase any cash component. as for charter, reforwardlegard a desired property in the last year verizon, soft bank and now altice spent considerable time thinking about or trying to buy it. the only company that hasn't is our parent comcast. >> 16 point gain because everyone was selling that stock because of the disney comments and now if you tell me that charter is worth 500 then i'm telling you that they are not going to be hurt by what's going on in the disney. >> there's perception that they're the only property out
there that's for sell. >> charter management made it clear in a statement they had if you recall when we first got news that they're not particularly interested. as i pointed out, the ceo tom rutledge has options at $564 a share and communicated with his board his intent to follow through on his plan to reach that stock price over time but you do have the presence of other shareholders that might be more interested and it's the board that makes these decisi s decisions. i see other out lets that criticize the fact that no offer has been made. so much activity saris around ts name and so much work is being done and clearly charter is that property that could be seen as a game changer whether it's for masa son seeing it with sprint or from patrick drahi that has this incredible desire to get much, much bigger.
amazing group of personalities here so we'll see but this is not going anywhere and comcast has typically not been interested because it can't get past regulators. could they get something done? were they to try there's a belief you have to think that altice would benefit as well. >> if you want to spend 200 billion why not buy disney if you believe in cable that much, double down. >> if you're comcast you love content too. >> right. >> that's an amazing story david. >> to me the worry might have been you should have been
worried about cable. obviously people that are smarter than i am looked at this >> we'll see if he gets there. >> he's a smart guy. >> let's head to the bond pitts and join rick santelli in chicago. take it away. >> thanks we're seeing something in the last 24 or 14 hours that we don't see very often anymore a real flight to safety. that's hard to dispute if you look at the yield curve off of its best prices and lowest yields, two are down and 30s are down four. should make for an interesting offer and if you bought the three year yesterday good for you. look at a week of tens basically, 221 to 229. that's the range to pay attention to i don't say that the market says it on the chart. here's what tens look like they have not dipped back into the preelection nowhere near
some of those yeelsd but let's pay attention. december 1st of bunds 2015 bunds are the key no such if there's huge moves to the upside or bigger moves to the down side in yield we hit 60 in july. last time we hit it was the end of 2015. all downhill after that. mario draghi helped up to 60 basis points by saying the beginning of brexit but not much after that >> pay attention here. most likely you'll catch a lot of positions off sides the flight to safety continues to effect it in a positive way a couple of things it's formation of dollar weaken has been developing for awhile but it's much more abrupt meaning you could gravitate toward the notion of headlines effecting
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we do business where you do business. ♪ ♪ more important the mccormick secondary. 5.5 a share. $90. look at that a lot of people feel it's a good deal franks and frenchs remember i put that stuff on everything >> what's tonight on mad money. >> remember when that blew up? it's just a huge winner and i think that i'm sticking with it. because upod is bob igers middle name. >> i broke the huddle for the
eagles, one, two, three, upod because you have to underpromise and overdeliver. >> we'll see you tonight the latest on the tensions between the unedtas it steand north korea and tim pact on the markets. dow is down 48 at ally, we're doing digital financial services right. but if that's not enough, we have 7500 allys looking out for one thing, you. call in the next ten minutes to save on... and if that's not enough, we'll look after your every dollar. put down the phone. and if that's not enough, we'll look after your every cent. grab your wallet. access denied. and if that's still not enough to help you save... ooo i need these! we'll just bring out the snowplow. you don't need those! we'll do anything, seriously anything, to help our customers. thanks. ally. do it right.
>> dow is having trouble market reacting to geo political tensions between the united states and north korea and others data on the way too. >> our road map begin with stocks taking a hit as you mentioned. tensions rising between the u.s. and north korea. president trump warning threats will be met with fire and fury. >> other big story, disney ditching netflix announcing it's pulling it's movies and creating it's own streaming service we'll get details on what the street think of that move straight ahead. >> but first we have the economic data crossing the tape. let's get to rick santelli for the numbers. >> we're looking at june final read on wholesale trade and
invenn toirs on ti inventori inventories. up .7. when you look at that number it's tied for the best number of the year with february you have to go back to december to get a better number that's multiples of 2.4. also a positive revision from minus .5 to minus . 1. that's interesting as well let's look at inventories. it's a duplicate up .7. it's close to what we're expethi expecting. that is the best number going all the way back to, well, november, no, i take that back december of last year as well. so two spot on numbers we see yields still hovering toward the lows. we'll pay attention to the news of the day carl we'll count on you for that back to you. >> thank you, speaking of which
let's get to the big story of the morning. north korea is reviewing plans to strike the u.s. territory of guam with missiles that comes hours after this president made this stern warning. >> north korea best not make any more threats to the united states they will be met with fire and fury like the world has never seen. >> president also taking to twitter writing my first order as president was to renovate and modernize our nuclear arsenal it's far stronger and more powerful than ever before. hopefully we will never have to use this power but there will never be a time that we are not the most powerful nation in the world. >> how do you square the presidents hawkish rhetoric.
>> we're hearing two different messages from the administration i think that president trump is absolutely right to be firm with the north koreans that we're going to defend the american troops in south korea and we're going to defend the united states he has a responsibility to do that i think though that war is not imminent here. the north koreans have not perfected a nuclear weapon that can hit the western part of the united states although they are making progress and we have to lean on the chinese and it may be that president trump's statements were really directed at beijing and not north korea because china supplies the coal and food, they have leverage over north korea and they have been unwilling to use it and i think the united states wants to get to a point where we make absolutely clear to the north koreans that we will defend ourselves and our allies but there ought to be a diplomatic phase here where the north corr reens come to t -- koreans come to the table
hopefully to freeze their nuclear and missile testing programs that's what is probably ahead of us. >> do you think a commitment to freeze their progress is a prerequisite to talks? or no longer >> it's unclear. if you listen to secretary tillerson today and also in the press conference he gave last week, he is taking, i think a productive stance here he is saying we're not trying to overthrow the north korean regime we're going to defend ourselves but there ought to be a period of diplomacy and it would be very unwise for the united states to drive this toward a war without having tried diplomacy first. we have to be strong as the president has indicated but we have to be smart about this and his rhetoric yesterday i understand what he said. >> how will we know if this
current strategy is working when the north koreans come to the table? then i think the united states will probably work with china and japan and south korea to see if we can get negotiations going again. it's a remarkable fact that as far as i'm aware no official in the obama or trump administration has ever met with kim jong un and you do not want to drive this toward war unless you tried diplomacy first. that would be a sane approach to try diplomacy first. there is time. there's no need to drive this further than it has to be driven right now. >> so you can invision a bilateral between the president
and kim? >> i don't think you'd start there. it's not a sign of weakness on the united states. at some point secretary tillerson or some other diplomat would want to make contact with the north koreans. you want to negotiate with your enmist and adverse sars and understand what their ambitions are. is there a deal they might make that might take us further away from conflict? that's a sensible course that's what any american president would do in a situation like this. >> how much are you worried about maybe not the use of a weapon by the north koreans but the proliferation of the weapons. their ability to sell what they know and what they have to nonstate actors on somebody else. >> it's a genuine concern.
so the president is right. he has a responsibility to protect the united states. he's right to draw attention to it it's interesting to listen to both halves of the administration i imagine that secretary tillerson's view is going to prevail. we're tough on the rhetoric. we build up missile defense that all makes sense but we try to really lean on the chinese here to do the right thing and put chinese pressure on north korea. >> this latest flair up appears to be the united states versus pyonyang what's the level of cooperation in south korea and japan and china. >> the south koreans are in the line of fire they'll be the ones effected so they have to be fully part of the american strategy as done japan. kim jong un has been threatening
them much more directly than the united states. so you need to have a regional policy here. u.s. alabama lice need to stand with us and then you have to draw in the chinese. that's where the diplomacy should go and will go in the next few months. >> mr. ambassador we'll have you back very soon thank you for your time. >> thank you so much alex, good morning, i'll start with you the bid for safety and the global risk off it feels like a minor reaction when krour talking about the stakes here.
how is the market taking this. >> the north korea situation is difficult for investors to wrap their head around. there's a lot of outcome and scenarios and moving parts but it's difficult to make conclusions from the north korean situation. >> it's really hard to figure out what does it mean for earnings and economy and central bank policy cha actually traditionally drives stocks. can you gain that out at all at this point. >> it's difficult especially with the north korea situation the highest probability scenario which is some type of diplomatic solution that gets us to focus
back on the economy and earnings. >> could bit the fact that we're looking at the volatility index. the fear gauge it was at super low levels we were in a period of unusual calm down below 10 been a long time since a correction perhaps this is just an opportunity to take some chips off the table. you could start seeing it begin to rise again. >> so instead of the vix at 9 you give 12 like today what is high volatility. >> even with the federal reserve beginning to reduce the size of the balance sheet and starting
to raise interest rates it may be a faster clip going into next year you're still going to see volatility subdued versus history and higher than where we are today. >> heightened tensions in places like north korea should investors be making moves in their portfolio right now? what do you recommend? >> do a lot of pruning toward developed markets but they're one of our favorite picks and one more area hit by the rising interest rates that we like would be rates if you think about, you know, again renters still paying
higher rent as opposed to buying homes. if you have rates rising at a gradual pace that could be a real bright spot in this type of environment. >> what's the preferred safe haven right now in this type of heightened geo political risk environment for you? >> well, we can always go back to the developed market equities the u.s. is the classic risk haven but for us we're looking at fundamentals. last months pmi readings a level of above r50 indicating economic expansion a pivot out of the u.s. looks attractive right now. >> you're saying u.s. stocks are a safe haven even with the 20 plus rise we've seen up to this point? >> the u.s. has always been the area people go to. the u.s. stock market particularly the more defensive areas is where people look to in
times of uncertainty but for us we try to separate the noise from the fundamentals. the fundamentals are improving and telling wrus to take the risk on and where we want to take that is regardless of what's happening in the political world. >> sounds like you agree on that >> disney deciding to go it alone cutting the cord with netfx.li dow is down 66 points. don't go away. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be.
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>> here's what he had to say about the new content. >> we have tv library product but we'll be making a significant investment in original content both movies and television series for this platform exclusively so if you are a familiar or you're interested in the disney brand and you want to subscribe to an extremely rich robust disney branded service you'll be able to do it and we'll use that platform to drive or power the product. >> for more let's bring in senior research analyst and david miller media and entertainment analyst at luke capital. good morning to you both. >> thank you for having me on. >> obviously concerns this morning. you think it could create a nice
entry point it seems. >> people are worried about how big of an impact this is going to be to next year's earnings. espn was a week year. >> this nba step up killed profit it's now anniversary so you're look at a more flattish growth trajectory for espn and people think it's going to get worse but we don't expect it to get worse because the cost basis behind you the opportunity or the risk would be in 2021 it's when the next nfl deal kicks in and that's going to be expensive and the question is how big will the
revenue base be at that point. >> big buyers in the market as well. >> without a doubt. >> are you that optimistic >> we downgraded this stock in mid april. at the time the stock was trading at 10 times and trading at 17 times earnings on the out year that's enough for us that's expensive enough and we're not surprised to see the stock down here at the 102, $103 level. still too expensive for us the stock is rated hold here at luke capital the ecosystem you have been writing about coming apart give me the consensus there. this is not their typical
business and there's a lot of questions among the investor base as to whether or not this is and jim said this is a hail mary pass. >> okay. there's two different initiatives. let's separate them out. on the film side taking disney's content direct to consumer given the brand, given the ip, given the loyalty on the film side i don't hi it's a crazy idea, right? and i don't think it's disruptive to our business models you've seen hbo do it and show time do it the sports pivot is more nuisanced. they're building like a fan intense fan product to go direct that to me will not be disruptive the question will be if the bundle keeps creating more and more, less subscribers do they go over the top with a bigger espn heavy product. >> what is it going to be as a consumer at home for all the different services that i may or may not want to subscribe to
it's going to be impossible. i might find myself saying like that bundle. >> what's funny is we keep doing this analysis and what's happening is the big bundle subscribers are leaving the system at a 3% a year clip so traditional bundlers are leaving quickly. he wouldn't comment on the pricing. we don't know how much they would lose from the licensing fees how do you build this into your model without knowing what the
profitability implications are going to be. >> that's the analysis that everyone has to do how are they going to price this thing? is it going to be $6.99 like cbs all access is it going to be $14.99 like hbo now? that was the question left unanswered on yesterday's call and further the piece of analysis that everyone has to do is, you know, how many core subs are they going to lose versus how many over the top subs are they going to gain right now with the stock reacting the way sit people are forgetting that it was a year ago to announce their attention with their initial investments so again i'll go back to my published comments we think the stock is downton quarter and not on the espn over the top announcement. >> although a weak take and other things going on around the
world. we should point that out you mention disney brand being sticky essentially does this mean only they can do something like this? what about stars and cbs is this a practice that can be widely repeated. >> that's another great question i think yes if you have a powerful brand with a clear message it's going to resinate but there's too many networks and many too companies with too many networks. those networks are clearly branded with a clear consumer in mind the rest of the market won't have that opportunity so there's going to be the separation going forward between the haves and have notes that's our thesis and i agree this was a reaction to a rather weak quarter and kind of not having clarity on the cost of this, i would expect disney the next couple of months or so to come back to the market and try to size this because i think people would become more positive once they get a feeling of how big an investment this is
going to be. that's what they should be doing going forward. >> it's going to be fascinating to watch thank you guys talking disney today. >> thank you very much >> we head to a quick break here take a look at shares of mylan earlier plunging and coming back after the company missed the street estimates also cutting it's guidance for the year squawk on the street will be right back most of the dow's losses you can chock up to disney dow is down 58 points now. s&p down 6 we'll be right back. [ male announcer ] eligible for medicare?
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they've changed and how we meet. . our phones have evolved, isn't time our networks did too? introducing america's largest, most reliable 4g lte combined with the most wifi hotspots. xfinity mobile. call or go to xfinitymobile.com. >> as i reported earlier altice and it's advisers have been work hard on figuring out whether or not and what a potential bid for charter would look like. there's been no engagement at this point but given the level of activity people close to the situation believe that one will soon be potentially forthcoming
though there is no guarantee charter itself of course become a very hot property. there's only a couple of weeks ago i reported on the efforts at softbank so come up with a structure or price that would meet the needs of shareholders that include john malone's liberty media that owns 28% of the equity and controls 25% of the vote as for charter management it's not seemed as interested in potential incoming bids. of course it's ceo has an options package that hits as high as $564 a share a number of years from now and he has communicated his desire to continue to follow a plan that's seen charter succeed so far and that would bring the stock to that price in a natural fashion. what the price of course would be and whether or not softbank or altice would be able to come near that price which many think would be at least 500 a share and offer a significant cash component to potential owners of charter is a key question.
both softbank and altice but still coming up with a significant amount of cash would be a key consideration and of course if you're a liberty for example or charter for that matter trying to put together a bid to buy where it's ultimately being repaid by the cash flow being generated by charter itself when you start to wonder why would i necessarily want to do that? altice has had success here in the u.s. in the midwest and cablevision more recently and taking the margins at those companies up dramatically. that of course would be part of their equation and they're willing to operate at much aier levels of leverage than many others in the industry are given their belief they can make the
margins up more on this as it goes along but certainly no shortage of interest in charter whether it's masa or drahi or of course previously this year and into early last year, late last year, verizon. >> two foreign companies though now. >> yes although altice usa listed here at the nyc not that long ago had a good debut. >> charter is up 20% it's impacting that company. when we come back more on the rising tensions between north korea and the united states. former ambassador to the un, governor bill riaronchds is with us when squawk on the street comes right back
>> they took the crude and they made product but they couldn't move that product. that's the problem here and that's what you're seeing reflected in pricing right now we're still higher but off of session low which is was 4965. in terms of u.s. production flat from last week about 9.4 million barrels a day but this production number is up. >> north korean saber rattling continuing to escalate today after president trump delivered this blunt warning yesterday take a listen. >> north korea best not make any more threats to the united states they will be met with fire and fury.
>> stocks and the currency got hit today. he joins us with the latest. >> good morning. well, there is some anxiety here here they are used to hearing fiery rhetoric from north of the border but they have never heard rhetoric like that from any president of the united states and frankly people here are not quite sure what that means because they also heard this morning from secretary of state rex tillerson that landed in guam, the very place the north koreans have threatened directly and they heard a very different message. a message of calm from rex tillerson. mr. tillerson saying that mr. trump was simply speaking in language that kim jong un might understand because the north korean leader doesn't seem to understand diplomatic language and mr. tillerson saying the president was delivering an important message. he wanted to be clear and he wanted to avoid any
miscalculation of course miscalculation and clarity is what this is all about because it seems like a mixed message and people here have every reason to be anxious because they are in the cross hairs. they have been in the cross hairs of regular artillery deployments for decades because there's 10,000 north of the border pointed at this city but they now have a new reality. they know from that intelligence assessment that they have a nuclear neighbor to the north. we heard donald trump's threats but what do they mean? what is donald trump's red line? what does he mean? what is u.s. policy at the moment is it the fiery rhetoric or the cool head of rex tillerson? so there's anxiety here. anxiety too in the region of japan where they commemorated the 72nd anniversary of the nuclear bombing of nagasaki that cost tens of thousands of lives
so clearly a nervous region here back to you. >> absolutely. thank you for joining us live from seoul tonight u.s. markets sliding amid the growing geopolitical tension it's also up the most this year. it's down almost .5% this morning. for more we're joined on the phone by governor bill richardson and we know you have had a lot of experience with north korea. you have been there a number of times. even negotiated with pyongang. how are the north koreans likely to interpret this new tone from president trump? >> well that's one of the very complex issues especially kim jong un that's afraid of his own shadow and concerned about him being
toppled and reyeem changime chao this is very unusual i thought it was over the top but it's been tamped down by secretary tillerson but with kim jong un, you don't know what makes the guy tick we could make a deal with the father t old regime, bargaining chips of prisoners and then you get something in return like a high level humanitarian aid but kim jong un is unusual you don't know what he's going to do next except that he's totally unpredictable. >> how do you read two things, one the threat of guam that we heard in response to president trump's latest rhetoric and how fast they're developing nuclear capabilities which appear to be faster than expected. >> well, this is the gravest situation i have seen in the korean peninsula in a very long time on your first point north korea
always uses rhetoric almost every day. but the fact that they were very specific about quaguam that the foerge minister was also very very heated is a bit unusual at the very start we should start insisting we get better sbel yens fr intelligence from our people because this has been a long time coming so the situation is very tense but it's not a crisis situation and i think a cool head is needed and i sense that rex tillerson is providing that but there's a lot of mixed messages you have them not on the same
message as the secretary of state and i think the deal here would be dialogue with the north koreans in exchange for them just cooling on some of the missile tests. just maybe short-term and see if there's common ground. there's enormous potential in the peninsula and we have south corr reens, 25 million in the perimeter of seoul that could face artillery shells, nuclear weapons, so it's better to use diplomacy. >> and finally, governor richardson, what is your sense of the economic shape that this country is in after this latest round of sanctions the economy is in trouble but these sanctions would effect one third of the north korean yearly
economy and since 80% of commerce goes through china, and we have got sanctions on coal on seafood, on north korean workers, this is the first real sanction on north korea that has some bite but it's only going to happen if china stops the cross border smuggling and enforce the sanctions. otherwise like in the past china only winked at these sanctions but this time it seems pretty serious with russia also joining in. >> we'll see if that happens thank you for calling in today governor bill richardson of course former governor of north carolina and u.s. ambassador to the united nations. >> breaking news out of washington this morning and for that we'll go to aman. >> that's right. a spokesman for paul manafort that was the campaign chief for president donald trump last summer is confirming a report from the washington post that the fbi raided one of paul
manafort's homes back at the end of july in a predawn raid to gather documentsand other materials. heres the statement from the spokesperson saying fbi agents executed a search warrant at one of his residences. he has consistently cooperated with law enforcement and other serious inquiries and did so on this occasion as well why did the fbi feel they needed to stage this raid was there some sense that he was not cooperating or hiding documents or other materials and why would the other materials have been in this residence in alexandria virginia what were they looking for at this stage all of those questions are still unanswered carl. >> thank you for bringing that tous. >> getting back to the markets here with us, art, it's good to see
you this morning. >> good to be here. >> talk about pattern recognition. what happens to markets in general when these sorts of episodes start to ignite >> well, it can be problematic so far we're seeing a lot more caution than panic and the korean market looked like it was teflon for awhile. there are no easy solutions here i mean, you can't do a surgical strike as governor richardson pointed out. there's many many artillery pieces scattered about hidden about that are aimed at seoul. possibly 23 million people at risk can't do the surgical strike and certainly can't do it merely on threats. no good at easy solutions. now you have seen the manifestation here and there's been movement at the safe havens like gold and treasury bonds and
that's moved along interestingly, they're using the japanese yen as a safe haven although it is one of the theoretical targets. so that's, i think the japanese people themselves just bringing the money home and -- >> during the tsunami and the earthquake and nuclear crisis it was straight into the yen. >> bring the money home and put it in the mattress an at least i know where it is then. we'll see. you're going to have to watch those safe havens if they begin to move very rapidly and then we're going to go into a different kind of phase of trading here but for now, still more cautionary than anything else i have been saying that the second week in august has -- >> we're celebrating one an
versety today as they froze some of those assets ten years ago and the credit crunch began. the opening ceremony of the winter olympics in south korea is six months from today and i wonder if you think maybe the north koreans see that calendar, will use that as leverage and can this be a low grade fever for the next half of a year. >> we can only hope so i think it really can. i think there's no really easy solution as much as china appears to want to help they have a problem. they're afraid that if they do it too much the regime collapses in north korea, that the migration of refugees across the border are equally important that north korea may just quickly be assumed by south korea and then they would have a
vibrant capitalist democracy on their border with a u.s. ally sitting there. >> maybe you can set up a desk righnet ar us. more squawk on the street in a moment after this quick break. ,n shares didn't even break 4. come on, check out that stop-and-pop! what do you think? my trade-off analytics indicate no one creates more space on offense. this allows him to nail a jumper from a densely populated urban area. what you're trying to say is from way downtown? i am still learning. i can see that.
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>> it was largely as expected. first quarter gdp was better than expected. the benchmark revision help and i should give a definition of what we're talk about. total labor the total number of people work. times the average hourly earnings and work week and get this money spent on labor divided by gdp, the total output that's productive. gdp should grow faster than labor and the more productive we have. >> productive and gdp are part of the same equation many say it's a statistical issue. they haven't quite figured it out. i don't know that a agree but you have things to enlighten us here. >> it's a 60 year chart of productive over a five year basis. it bottomed in 1982 and in 2016 that on a five year basis productive is as low as we have seen in two or three generations right now. it's very, very low. >> all right now that leads to the next chart the quality of labor
it's a problem, explain. >> yes, why is productive so low? because one thing is quality this is nfib small businesses. this is quality of labor problem. higher is problem. this is a 40 year chart and quality of labor is the highest in 40 we have seen in years average hourly earnings is not improving because they're not getting the good workers that they have to pay them. the higher number is leading to -- >> all things equal, we want this to come down and make this go up on the earnings side. >> correct >> having said all that, having shown some really cool charts, what observations can you get -- how can they help ramp up, create better conditions, crop conditions to have more growth in productivity? >> there's a two-level economy at the high end, you have big companies. companies over 1,000 employees companies over 1,000 employees employ the same number of people today as they did in 1980. it's all productivity growth. >> that's pretty shocking
considering technology isn't like building things and that the big plans are for a lot of people that's really quite amazing. >> and it is technology, but most of the people in this country work at companies less than 1,000 the technology is not there, especially when you get down to less than 100. 537 people stopped talking to fortune 500 executives to start talking small business executives that's where productivity is waning it's not at the upper levels. >> it's funny that you mention that, we're almost out of time tax reform is still at the heart of the issue here. >> absolutely. tax reform and all of those other things would really help them quite a bit they are making this very simple if they can cut the rates, they can hire more people, get more productivity and get that virtual cycle going. >> jim, thank you. always fascinating to get your view in charts
david faber, back to you thank you very much, mr. santelli time to go to john fort for a look at what is coming up on "squawk alley. we're going to dive deep into the cloud and this deal that oracle and at&t have. how are we going to measure that what does it mean for the cloud siss overall that's coming up on "squawk alley.
big 2345inames in technolog all vying to play a role in health care. bertha coombs is joining us with the latest on that >> apple already staked out using their platform for helping with research. for amazon, alexa devices could become the gateway to health care in the home >> what are my activities for today? >> your activities today include two medication reminders >> 81-year-old dvonne meyer is in a home health care trial in los angeles to help seniors manage medications and message their home aids. it's made her a fan of alexa
>> i think of her as a person, but she's really just a machine. >> boston start-up oracle is designing health care apps for a number of health care designers for patients at home and to integrate the patient into health records alexa right now is the first mover in the space, but developers are looking to make the app work across all of the devices that are coming along and different health provider platforms. >> the ability to interact with an individual consumer with their data and the world's medical literature, no one has done that yet. the question is, ultimately, i think there will be a race between the likes of amazon, apple and severely to get their first, as well as perhaps a couple different start-ups. >> the big key for all of them is to make sure they can keep this health data safe,
particularly on the devices that are always listening carl bertha, good story bertha coombs. when we come back, more on these markets as tensions continue to mount between north korea and the u.s. the dow is down 51 off the early 'rba ia nu wee ckn mite are you ok? what happened? dad kinda walked into my swing. huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe! without that cash from - aflac! - we might have to choose between hawaii or your face. hawaii! what? haha...hawaii! you might have less coverage than you think. visit aflac.com and keep your lifestyle healthy. aflac!
welcome back to "squawk on the street." crude is declining more than expected natural laggers are valero and hess as well that does it for this hour of "squawk on the street. let's go downtown to nyc good morning, it is 8:00 a.m. at the disney headquarters in burbank, california it is 11:00 on the east coast. and "squawk alley" is live ♪