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tv   Squawk on the Street  CNBC  April 27, 2018 9:00am-11:00am EDT

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being in the red through about the entire session that we've been watching this morning s&p futures up by 9. the nasdaq up by 117 helped by not only strong earnings but better than expected gdp numbers mike, thank you. make sure you join us on monday. right now "squawk on the street." good friday morning. welcome to "squawk on the street." premarkets suggest the nasdaq will lead the open amazon propelling the index higher after last night's blow out earnings microsoft, starbucks europe is up and then back home gdp 2.3 as strong business spending makes up for a tepd consumer
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amazon, microsoft intel. the nasdaq will surge at the open and shares of amazon set for another all time high. is it on track to be a terror dollar company. >> history on the korean peninsula. korean leaders pledging to declare a formal end to war and work toward complete denuclearzation. >> and starbucks vowing to learn from the mistakes. kevin johnson will join us later on this hour first up, amazon intel microsoft rallying but amazon is clearly the stand out. it's poised to open at a record high profits more than double helped by cloud announcing it's hiking the price of the prime membership from $99 to $119. something they have not done in about four years. >> last time was staggering. watching things come over. initially people didn't understand microsoft was strong. people thought intel was strong.
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but initially people realized instantly that amazon had gone to another plane it was literally no longer the company they were able to model because it's earnings explosion came from the tremendous level of their model they billed out. and as jeff said, we're seven years ahead of everybody with amazon web services. it was the star. but they put so many products that are working in the release. it was difficult to figure out which was better and then they put the price increase i think everybody will be, once again, like, you know, when it happens to them. they won't notice it amazon is well-tuned army. they've got, you know, they've got cavalry but it's, of course, mechanized they've got air force. they have everything this was the best quarter i've ever seen of a company. >> what? >> yeah. >> wait.
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i thought you were going qualify that. >> $2 better off $1.37 basis do you not call that the best quarter ever what does it take for you to see a great quarter. what are you looking for in incrementalism. >> i think the idea it's the best quarter ever is easy to argue today. don't you think. >> thank you. >> aburent up is twice aws makes 20% more than north american retail. >> there you go. >> 1.4 billion was aws profit? >> yeah. amazon web services, by the way, could have behavior. they don't have to build out any. >> a billion dollar revenue it has accelerating growth. >> yeah. 44 to up 48. >> yeah. for a company ever >> the reason why it's not a trillion because people are willing to pay $300 more than
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they should. but they could it's going to a trillion dollars. >> so that is -- >> we both said that the other day. >> yeah. >> how is going to get there other than the greatest quarter ever >> it helps. >> yeah. any one of these could have gotten it. it could have been advertising web services artificial intelligence devices. >> i understand. when it comes to profitability facebook did you happen to notice their margins or see how few people they have and how much that delivered in terms of the profitability. and google is pretty profitable company. >> i was just saying, david. i was thinking the other day fang, you know, facebook, amazon, netflix, google. >> the biggest are the a's amazon, apple. >> apple, i think, will be stalled at the 800 level amazon will blow through it.
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>> because if we got more reports today about the ten. >> yeah. tony is why doesn't hedo an outright sell? calling for ge a $9 stock but sticking by the $11 price target i don't mind it but he's willing to pay $20 billion for the life science. he kind of skates that look amazon has -- it's not a juggernaut it basically is a country. compared to an army. i should have said a country what is incredible is they can call president trump and say, you know, we're going to double how much you pay -- of course some people think it is the "washington post." how is that? they could say we'll pay more and it wouldn't impact them. >> their media is low compared to other companies in their
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space. as for the prime price increase, which has gotten the big headline in general media this morning. the cfo was asked why now last night. >> caller: it's nothing more than looking at the state of the program. the high benefit it's delivering i mentioned that four years ago when we last increased the price of prime you get 20 million products within two days. today you get over 100 million products within two days and many, many, many products within one day same day or two hours. so there's all kinds of new features that we've continually added to the prime program it's much different than it was in 2014. this is a reflection of that a better reflection of the cost value of the program. >> so 20 million products four years ago now 100 million products. >> they've increased and improved their service every year
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i'm willing to pay more per month. this is no longer a company that is a next-day service free this is a company that will soon be able to anticipate exactly what you want and it'll be at your door. >> i know. you don't pay for hbo anymore. it costs more than prime. >> i don't watch it. >> i'm thinking about getting rid of mine. >> i'm watching game of thrones with my daughter and it was like no. >> you can't watch that with your kids. didn't you know it going in? >> no. i didn't. >> what about advertising? we haven't talked about it as much it's a fast growing we're talking about a multibillion dollar business now. in terms of advertising. >> now you're starting to come around my way. the advertising business can double amazon web service if you go to microsoft in the conference call, they did a fantastic job. they're trying to play catch up to web to cloud i think the intel call was a
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beautiful call brian was talking about the idea i had to write some of it down it was spectacular he said this is made intel has to go full out to make chips for the data center. the cloud grew 45% their clouds business i mean, you can't. i'm comparing when i listen to this i remember andy grove telling me when they went -- they were early innings. i laughed. the stock had gone from the equivalent of $2 to you know what did i say about $5. it went from $1.50 in 1993 to $3 and andy grove said it's going to be early innings. everyone laughed seven years later it was $72. >> on amazon, sort of instructive we're talking about operating margins and prime prices bezos tweets about space launch preparations underway for
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a eighth test flight as we continue our progress toward human space flight currently targeting sunday he goes on the live stream information. >> interesting i was comparing his balance sheet to the other man who wants to go to mars quickly. >> musk. it's a little bit different. >> yeah. a different kind of company. >> they have relied, to a certain extent, on the generosity of people. >> let's go back to microsoft. so much speaks to the growing importance of the cloud business overall. >> right. >> not to mention the cap x requirements for cloud you think about the tax bill and cap x you can write it off immediately. >> yeah. >> they spent $3.5 billion at microsoft. >> they had to 93% growth in currencies i think it was up 89% year overyear for azure, jim. >> it was so much. >> incredible growth.
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>> you can throw out they have 60 million xbox people so what. what does that mean? i lock at what is happening with microsoft and they've got the azure it's just doing so well. linked in doing so well. >> yeah. andy is competitive, the cfo we want to get to unis now. >> you could have taken another half second. half a beat. >> no. this is important. it's a historic story being made across the pacific the leaders of north and south korea are getting together maybe the war will end it's still on. what do we have? >> it will be a wonderful thing. >> you had to come to me it's a dramatic moment here on the korean peninsula after the summit, the leaders of the two koreas moissued a joint
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statement saying they would vow to end the korean war. there were also interesting highlights in that joint declaration. they said they want to move to a peace regime a set up a liaison office. they agreed to phase disarmament, and the one getting the most attention, i'm sure in washington, is the total denuclearzation of the korean peninsula. what is getting people excited here is, actually, some of the more personal aspects of the summit instead of the formal stuff i just talked about. probably the most discussed one right now in south korea is the moment when kim jong-un, probably the most secretive person on the planet, went in front of a podium and addressed the press live on tv and then one of many fascinating moments of the day just a couple of moments ago, the two leaders wrapped up their
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evening of dinner and a show and they were watching a broadcast of themselves while holding hands. holding hands is all well and good except it's important to remember that we have been down this road before so since 2000, we have seen two summits here on the korean peninsula. they both ended with peace declarations and then nothing came of it and on top of that, in this declaration, there are some vocabulary issues. people north korea is saying the use of "peace regime" instead of "peace treaty" gives north korea an out and, also, they are really focussed on the fact that this is more meaty but at the same time it hasn't resulted. we don't know what is in kim jong-un's mind we don't know whether or not he is as committed to disarming and dismantle this nuclear program as one might think
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even though there are challenges of making sure this document goes from paper to reality, there's a lot of people here excited saying they're hopeful it's going to set the stage nicely for kim jong-un meeting with president trump. >> thank you very much for that. amazing video last night that half hour meeting and crossing the line to the peace house, as they call it the question now, will they get into the weeds on denuclearzation. there have been promises before. didn't work out. >> yeah. i remember when i was growing east and west germany. it was inconceivable they would get together if you crossed over, you were shot and i guess anything can happen. anything can happen. we need someone to say tear the wall down.
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this was remarkable. you visited demilitarized zone my wife and i were watching and we were scared for you you can see it. >> i think a lot of tension is manufactured for media purposes. over the years it's turned into a tourist trap the president tweeted this morning giving president to president xi i'm blown away by this an the one hand doing missile tests. >> it's interesting turn there's no doubt about it. people are trying to understand why. but at the same time it's very promising. i guess there's still a wait and see attitude here. >> but, you know, look obviously, you know, not that long ago i thought they were
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number one problem in the world. >> when we come back, talking to the starbucks ceo about the quarter and the controversy surrounding his company. take another look at the premarket. two trading days litteft in aprl alerts -- wouldn't you like one from the market
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starbucks down in the premarket. quarterly earnings in line revenue topped estimates they maintained the full year lookout but it excludes the plan closure of the stores in late may for the anti-bias training we'll talk to starbucks ceo kevin johnson later on this hour sales up but margin down to 15.6 it will be interesting. >> yeah. here is the problem with starbucks. it's a growth company. okay >> the stock is basically unchanged. they brought back a lot of stock. the same price as it was.
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>> it's sat here and i think one of the problems is that the u.s. always looks like it's about to break out and then it doesn't break out. china continues to be break. when we think about it's a difficult comparison versus starbucks. that's how i like to look at it. the old starbucks that just had such fabulous growth but the market doesn't want to give credit because it has a high priced earnings multiple it's a quandary because when you see the number, you always expect them to say wow better than expected what they say is, you know, as the quarter progresses, it got better than expected and that's not enough in a market where you have explosive growth from other companies. >> and that's comparisons. >> so what happens you going to change over the shareholder basis. the stock comes down and becomes value stock. >> what i was going to
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recommend, by the way. is that if you give us a dividend, i think it could become the fastest growing dividend consumer products but, by the way, that was what i was going to ask kevin i gave it away he has plenty of time to think about it i think the big dividend would make it it's a great consumer product story with a good dividend that is faster growing. faster growing than a proctor, faster growing than a clorox it almost has to be rerated as a company that sells consumers products rather than a company that is in a fast-growing retail group. >> sure. yeah of course, it comes on the heels of dunken doughnut up .5. >> all qsr i think that's mcdonalds. >> and i listen to that and, okay, he's a well reasoned guy
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some of these companies are doing well but i don't -- look, i always wait for them to say this is a fraud. saying this area doesn't have a lot of growth. it made me think, you know, here is something the average north american 300 cups of coffee more in the west a cup and a half a year in china. what they have to do is missionary work. they have to make it so the chinese realize they should start their day with a cup of coffee if they do that, but, you know, wow. >> that's a tough sell in china. >> yeah. it's about tea in china. we know that. >> yeah. we'll get cramer's mad dash and count down to the opening bell and talk to kevin johnson from starbucks in a little bit. another look at the premarket on this friday.
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all right. we're counting down to the opening bell six minutes from now and the end of the week. >> yes thankfully end of the workweek. >> it's been a rough week. >> yeah. so many earnings including chav r including he recei including chevron. >> your number three team jets. >> yeah. >> we did our stock draft.
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mr. wonderful, he does actually like to be called that, just in case you think it's high per blow. >> okay. >> chevron reported a number we want to congratulate michael it was like the old days when oil goes up, chevron was the most levered of the majors to the price of oil. the cash flow here is just incredible they did a truly fantastic oil number three months, 3.6 billion versus 2.6 billion this company is uniquely positioned for higher oil. >> why >> well, you know, it's got levers it's got up stream, downstream it put a lot of money in the downturn everyone else is falling back. they continue to drill exxon was selling more than 12 millions a day mostly i would say it's well and
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they're getting the most out of their bounce it's a good company. mr. wonderful, well, the second is blue apron. we know what it's going to happen with blue apron if it's not up he is going to buy the whole company. >> it shouldn't allowed. kevin johnson from starbucks
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amazing developments in south korea and north korea. and gdp. >> we only have enough money to take up one sector. >> there's the opening bell and the s&p at the bottom of your screen we'll talk to the ceo in "squawk alley. and the big thing yesterday how facebook added to gains.
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if amazon can do it, does it change the psychology we dealt with a week and a half ago >> these companies are being recognized if you look at the spike in yesterday's market, on facebook was spiked at the beginning. the rest of the market spiked during our interview with larry kudlow he spoke very optimistically about trade talks. but, yeah, i agree i think that facebook is getting rerated itself as being a company that may not be in the government cross hairs unless they screw up again and i think they are spending a lot of money to not screw up amazon i don't know what the government -- what the threat is to them. alphabet is self-inflicted almost back to where it was. but alphabet has yet to demonstrate how much it's spending facebook totally correctly said how much it was spending so facebook was particularly
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great quarter. and i think that david was right when he talked about new sign ups. there was renewed growth with facebook renewed growth when we thought there would be declining growth. >> right. >> because of the fourth quarter they had 700,000 in terms of a decline, i believe, and up a million in the first quarter of this year. so reversing what was clearly not a trend. >> right i guess just a reversal. >> facebook too much demand. intel too much demand. microsoft too much demand. >> steve fulton takes facebook to a buy belatedly here they say it's too cheap to ignore that's some of your point on facebook makes sense bezos and amazon, his stake is closing in on $130 billion and the premarket increase here would have increased, as well, by almost $9 billion. >> i saw it as the most secret
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of the major ceos. we don't -- he doesn't come on he doesn't visit the white house. he's not getting invited to the white house. he's doing his job i have the image after the great letter he put out he's a serious practitioners of the idea you must work harder than everybody else work smart and hard. i think he wants other people to be as successful as he is. he's not a zerosome guy. i wish i could meet him. >> you would be surprised. he's capable of spending a lot of time at home the family he's got his four kids. >> are you serious >> yeah. dead serious i think even more of him that's fantastic and, you know, i think he's able to just have intense focus is my sense. >> yeah. intense focus. >> he does.
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>> guys, it's worth coming back to i'm sorry, really? >> yeah. wow. that was hostile. >> that was my bad. >> it's worth coming back to charter, isn't it? it's down about 8.5%. >> are you putting a cable >> no. you had at&t yesterday. >> oh my. it's gotten worse. even in the last few moments let me give you the reasons why. it's basic here in terms of at least a quick read they came in light on ads of broadband. and residential broadband net ads were 331,000 below estimates. they lost 122,000 residential video customers. that was also worse than had been anticipated adjusted was slightly ahead. $3 billion, at least up 6.5% year over year i want to get more into this
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the stock is getting battered is charter. wants to take over candidate, as people know. potentially from softbank. verizon. we've been seeing pressure here yesterday with the direct tv sub losses of 188,000, i believe even though at&t was done. pressuring comcast which has a big seller in the children's fund, which continues to unload all of its shares. now this this is a bad week for cable and distributors of traditional tv. >> seeing some of the year on year ratings of children's programming on cable television.
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disney channel nick you know, well in the double digits. >> yeah. >> kids fire up netflix or youtube now. and the cable has what cable given. >> yeah. i'm not sure we've had the call yet. we'll keep close attention given the performance of the stock now. it was interesting to watch at&t down over 6% yesterday you have people that have been at time warner forever waiting for the potential close of the deal and waiting for the culmination of the trial which the government is trying to shtop th deal you're talking about a deal worth 107.50 remember that for time warner. $53.75 a share
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what was $53.75 is sharing at&t stock. you're capped out at a ratio 1.347 of at&t shares you do the ratio on at&t shares you can see why it's trading at the lowest level it has in the 22 months since they announced the deal maybe if the government won it the stock could go up. >> i feel the same about nxpi. if the chinese government would kill the deal. >> yeah. it would go higher these are companies that are frankly hostage to the required. by the way, the interview. >> thank you yeah he's still, you know, the ceo of qualcomm seems somewhat confident. once the back and forth dies down or there's some peace between china and the u.s. when it m comes to trade.
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we'll see. >> this is about getting things from the internet that are not we don't have cell phones that are right now capable of doing something dramatically different. they just don't. >> yeah. fast company got the piece out today about apple. backing up what they're saying on demand. they question the wisdom of launching a $1,000 phone in the late stage of the phone era. >> look, i think that there is a they perceive no growth. and when you see no growth in an environment they're like, you know, they're not as bad as cable in terms of how people perceive them.
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but the phone is a questi-- cri right now. >> so are my comcast shares. >> yeah. sorry. the gdp number better than expected lots to get to inside the number rick santelli. >> hi, carl. a surprise a nice surprise. we can see see the act i guess the crowning achievement of the week is at 303. it's the crowning high yield on an interdate basis one was a settlement if you look at the line up two on change. five are down one. flattening is back makes sense. the long end in control. yields move down and the weekly closes are close to that because weekically closes are one basis points
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lower than yesterday of november of 2013 you can see there's the other crown. 303 to 303 that is hugely technically significant. we break into a zone we haven't seen since 2011. or go into a trading range which the treasuries like. but really the operative issue, in my opinion, is not many pope act. if you look at the next chart from february of this year, now you really get to what technicians and these strtrader love the high in february was 295 the high we made is -- we're expecting yields to go down. if it doesn't take out 295 they'll stop out above 303 or
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they'll accelerate the positions under 295. it's a real key level. now i talked about it. the of a 56 or 57 basis points it's trippy. want to know where the market is going to go. tell me where they're going to go dollar index is the big trophy of the week. it's a stairway to heaven. open the chart up year to date 92.is 12 is where we closed. right now up a cent away that's the level to watch. especially on a closing basis. 10:30 eastern john clark i have a couple of good questions for him. back to you. >> all right we can't wait for that when we return, an exclusive with starbucks kevin johnson as the dow has lost early gains down 24 points
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shares of starbucks are down
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slightly this morning. so joining us now is exclusively starbucks ceo kevin johnson. so good to see you i understand that the progression during the quarter was much better. january a little bit weaker than february and march in u.s. the incident in philadelphia i know you spent a lot of time on is the progression continuing of strength despite what occurred that had national implications >> well, jim, certainly as we commented yesterday, i mean, we delivered, i think, a solid quarter. we certainly met expectations. we exceeded on the top line. it accelerated you know, you mentioned the incident in philadelphia certainly i was on the ground in philadelphia understanding every aspect of that
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we're going to do the right thing to be a better company because of that. now certainly, you know, we commented that the impact in philadelphia we have not seen a negative impact on our national comes thus far in the month. >> i want to talk about china for a second there's a remarkable comment you made china they have they are used to having a half to one cup of coffee per person per year versus 300 cups in the united states what could make china decide to drink more coffee? >> well, certainly, jim we've been in china for 20 years now we are introducing our chinese customers to premium coffee experiences as well as tea and, you know, you can see that in the fact we're over 3200 stores in china. we're opening a new store on average every 15 hours in china. and with the middle class population growing to over 600
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million, you know, we think we have a phenomenal opportunity to continue to reach more and more customers in china and introduce them to premium coffee experiences in our stores. that will lead to growth and that is, you know, that's the premise. i think our asia pacific region grew over 50% that quarter part was the acquisition of the joint venture of east china. all of mainland company is a compa - china is a company-operated. we're focussed on the long-term potential for starbucks. >> i was thinking yesterday in terms, kevin, you've been around for a long time. tech, too. it's there a kwaquandary about e evaluation for starbucks it's been unchanged the last three. if you regard a consumer products group company, your stock would be dramatically higher you have better growth why why do you think why you are not being rerated like consumer products story that's what you are. maybe the fastest grower of all
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of them >>well, jim, you know, certainly we're in this era we continue to post good solid growth on top line good earnings per share growth we grew earnings per share this quarter. 18%. at the same time, over the last three years, we have continued to increase the dividend in fact, if you look at the dividend increase. the increase in dividend has succeeded the increase in earnings per share it's part of the formula lead us the conclusion we're returning $15 billion of cash to shareholders in the form of buy backs and dividends over the next three years you know, so clearly we're going to stay focussed on driving the growth agenda we've outlined and at the same time, returning more and more cash to shareholders in the form of dividends and bye backs. we think that formula is a good long-term formula for shareholder value creation and we've demonstrated that over the last three years
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and i anticipate we're going to continue to focus on it from that perspective. >> kevin, you mentioned no impact on national comps because of philadelphia. can the same be said by demographic or market or region at this early stage? >> certainly, carl, we had, you know, for that period that the protest and the incident occurred in philadelphia certainly those stores were impacted for a brief period but it's early days. we don't have all the information on demographics and but certainly nationally and look at regions across the united states and, you know, there's not been a measurable impact that we can attribute to philadelphia certainly in the city of philadelphia during that period. >> kevin, what do you do i own a restaurant we talk about it a lot what do you do with the bathroom what did you do with the idea that it really does seem reasonable that someone pay something to get to use the
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facilities the judgment call is so hard frfo the barista or bartenders. what is the wrong or right thing to do? >> you know, for >> for starbucks, we built this company on the concept of the third place. the place that's not your home or work, but the third place you come to gather, you come to socialize, you come to have connections over coffee. we always strived to create a warm, welcoming environment for every single person that walks through that door. as part of that, we're reviews every aspect of how this situation could have happened. every single aspect from policy guidelines, judgment, training so we've got do some work to make sure that, you know, we continue to create that warm, welcoming environment and do it in a way that enables our partners in all of our stores to
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bring that to fruition so we're looking at all of those things we'll do the right thing >> all of this draws an interesting question you also have franchises -- one of my friends is a barista in a supermarket out west they have certain rules than what you want to do. how do you corral everyone into one view >> certainly, jim, in the united states, roughly 40% of our stores are with licensed partners, as you point out these licensed partners are great companies that built starbucks within grocery stores, hotels, other properties that they own we have a close relationship with them. they work to make sure they bring the brand to life in the right way. so it's a balance. it's through dialogue and partnership with these companies that we've been partners with for years that we are working together to make sure that we think about this holistically.
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roughly 40% of the stores in the u.s. are licensed. we're working with our licensed partners on that journey as well >> i'm reminded that it's just over a year now that you took over a s howard stepped aside reflections within that past you're and how does it compare to what you thought it might have been? >> howard that been right there by my side he's been helpful, supportive. but at the same time he's been good about stepping back so i can step up and lead over this last year, you know, we've done a lot to streamline the company, get more focused on core value drivers and the way i think about it is this last year, much of it is having the wisdom to know what must be preserved and honored from the past, but also having the courage to reimagine and boldly reinvent our future that's the balance with which i tried to strike the work we're
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doing. i think that's been the right balance, and howard has been a fantastic partner in that journey. >> kevin, sometimes i think starbucks, you have this great, physical plan. people love it periodically you've talked about liquor periodically talked about food, consumer products. is there some killer product you would like to offer or are testing now that would make it so people want to be there from 7:00 to 11:00 at night >> from 7:00 to 11:00 at night, you talk about that evening/day part in our receive stores, we have brought mixology, including alcoholic beverages, mixed drinks that are in many cases bring coffee into those drinks as well. so the place we're experimenting with things in that day part are in our high-end, roastr
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roastry principi stores. but in the core starbucks store, most of the time it's students at night doing homework together stopping by for an after-dinner coffee on your way home from dinner so our core beverages and our core offerings in the starbucks brand are also relevant. in higher-end stores we will bring mixology to the table. >> let's talk about constellation brands run by rob sands he has put an investment into -- don't laugh, please did -- put an investment into canopy, which is liquid with marijuana which will one day be legal around canada and around the world. any thoughts about that? >> no, not at this time. this is probably outside the brand guardrails we would
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consider for starbucks appreciate the suggestion. >> i had to go there i think it's going to be the killer >> finally, kevin, commodity costs. everybody is watching the relationship between cocoa and hershey. you have raw material input costs as well. forecast for the year on that front? >> well, carl, we buy our coffee certainly well in advance when we need it we're constantly looking at the seed price we'll buy green coffee, keep it in inventory until needed. i think coffee is purchased throughout the rest of the fiscal year for sure, a bit into next fiscal year the model we use for coffee and the seed price is a solid model. like everyone, we watch commodities. we're in a good place as it relates to coffee. >> kevin, please share what you talk about in that day you close
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the stores in the afternoon, we can all learn from you kevin johnson, ceo of starbucks. thank you very much for coming on "squawk on the street." >> thanks, guys. >> really smart question about the bathroom i was thinking there's so many of these large companies that have to make human calls, in facebook and alphabet's case, it's about content and what a person is trying to say, in hospitality it's about how you treat a guest. >> it's so hard. dunkin' donuts, the ones i go to they want you to buy walgreens, you buy it doesn't matter at some of them some of the starbucks out west, it's open. you have to. it doesn't matter. you get situations that are difficult for the baristas they have to take the judgment call out of it it has to be one or the other. it can't be on the spot. it's not far for the baristas.
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if you have friends that are baristas, they have to do so many things at 5:00 a.m. what a hard job it really is what are you watching tonight >> briggs and stratten is down and sentin which may be the best company handling or healthcare system what a week. this is the hardest week in a long time. >> next week is no picnic either >> come on, man. i set the alarm at 3:00. i can't set the alarm for before i go to bed. we'll see you tonight. rest up. "mad money" at 6:00 p.m. when we come back a closer look at amazon which is back below 1600 this morning as the stock hit a record high at the open we're helping today's leading media companies create more immersive ways to experience entertainment
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welcome back to "squawk on the street." we have our april final read on the university of michigan everybody paying attention mid month was 97.8 that's our benchmark the number is 98.8 98.8 is a good number, but won't surpass the march read at 101.4,
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which is what it comps to. that number was the best since january of 2004. let's go through some of the internals. looking at one-year inflation expectations, they remain constant at 2.7. the 5 to 10-year inflation, 2.5, one-tenth hotter than the 2.4 in the rearview mirror. big focus today remains the dollar index and key long end global rates backing away from some of this week's highs, which were technically significant to many of you viewing and investing. "squawk on the street," carl, and back to you. >> busy day. rick santelli in chicago welcome back to "squawk on the street." i'm carl quintanilla, along with sara eisen and david faber am-o our road map begins with a historic day as leaders of north and south korea meet and pledge to have an end to the korean
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war. and a deep dive into amazon's blowout quarter the stock is hitting all-time highs as the e-commerce giant inches closer and closer to that 1 trillion dollar market value. and speaking of amazon, you'll hear from a traditional retailer the ceo of signet jewelers on the state of the industry. amazon hit a new record high this morning coming off that huge earnings beat company tops a billion dollars in profit. this is what jim had to say. >> this is the best quarter i've ever seen of a company >> what? >> yeah. >> i thought you were going to qualify that >> $2 better than a $37 basis? do you not call that the greatest quarter ever? what you are looking for incrementalism this was a new order >> the idea that it's the best
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quarter ever is easy to argue today, don't you think >> for more on amazon and the big tech earnings, let's bring in jon fortt and the senior analyst at suntrust. is that hyperbole or not >> definitely not. the strength was across the board. it was not only the strongest, but also the cleanest quarter on record >> jon, we had discussions at our desk earlier this morning trying to find things to complain about >> it wasn't the strongest quarter ever i remember those steve jobs and tim cook quarters when the iphone was first ramping iphone 4, 4s, they were blowing the doors off with profit numbers that were jaw dropping units of a consumer product selling above $500 asps, people had never seen something that
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expensive selling in that kind of volume around the world this is not about apple. this is about amazon and the others that was an amazing quarter. if you look at amazon and microsoft and intel, this was just all about cloud there's been some questions earlier in the cycle about how strong the cloud was we saw from oracle, some questions on how their software as a service business would scale. it's clear you have to segment out the different players again. there was thought that the second and third tier players were coming on strong in a different way, now you're seeing first tier players, amazon and microsoft just continuing to hit on all cylinders cloud was up 49% for amazon. azure was up 89% for microsoft, office 365 up 45%. the cloud segment grew 45% for amazon and microsoft, for intel
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that was the single largest individual segment that's significant >> it sort of feels like a tale of three companies jon is highlighting the cloud business, aws, which continues to be a profit machine there was this $2 billion advertising business that grew 73%. seemed to ab blowout and then prime, of course. those price hikes on prime talk us through how those three businesses all work together >> sure. i would argue, actually, that while aws was huge, we already knew that aws was doing well the fact it accelerated a bit is great news to me one of the biggest highlights last night was all about online advertising, where for the first time we can sink our teeth into real numbers. they're doing about $2 billion in digital advertising, that's an 8 billion to $10 billion run rate for 2018 that puts them as the number three player after google and facebook.
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what's really important there is that much like facebook, much like google, their profit margin in that business is incredibly high we think well north of 70% so the takeaway is most of the profits that amazon reported last night really actually came from the advertising business and all the profits that aws did, which is about 1.5 billion there operating income, that goes to help fund the e-commerce business creating this unfair competitive advantage that amazon keeps having over everybody else out there >> so for all those investors who for years wondered if they ever post consistent profits, are they now habituating investors to look for it >> when you look at the stock and the way the stock is trading, that's the case we are starting to see what we have been expecting out of amazon for the last ten years, which is leverage in the model
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if you look at their operating income, it was about 4%. that's 35% more than what they did the same period last year. now, clearly this is not a management team that is shy or would shy away from doubling down on investments. so, you know, never say never. but so far at least the last two data points we have, that definitely shows incremental margin leverage, which is music to investors ears. >> what's the risk, jon? a presidential tweet, midterm elections, increased political scrutiny and regulation? >> i think amazon is living in a realm of its own presidential tweets might have an hour by hour impact if it's clear, there's one company that president trump has attacked consistently since the beginning of his presidency, it's amazon. lockheed, he's been off and on amazon he's consistently attacked anybody who bet the other way on
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that has done well >> and bezos has not commented on this. they've been completely quiet which is another interesting strategy >> i think amazon is really interesting in its advertising business in the sense it it's a wall garden in a way like facebook but in a way like we've never seen before. they're advertising on their own kindle devices advertising books within their own ecosystem. advertising to spark their own sales but yet getting a cut from people who want to encourage that i'm not sure how you measure the size of the audience that amazon is advertising to and how you take into account the costs and benefits associated with that. it's different from anything i've seen before it's like a theme park in an advertising ecosystem in one >> one last question on the prime price increase for a while we were thinking maybe that i work to get into lower income strata.
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does this make sense is there enough elasticity there? why do they choose to do this? they say the number of products available now. >> yeah. they're absolutely actually going upstream and downstream. so they launched the monthly several years back in fact, back in january they increased the price of the monthly from 10.99 to 12.99. we saw this coming two, they are spending about $6 million a quarter for shipping costs, and three, they keep adding multiple products, digital products to prime to improve and increase the value proposition. i think they're taking a page out of the netflix play bobook which is every couple years they will come back and hike the price of subscription. you did not see a lot of push
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back in 2014 when they took it from 79 to 99. i don't suspect you will see a lot of churn in the user base or in the net ads coming from the price going from 99 to $129. >> yeah. thanks fascinating story today. we'll see you on "squawk alley" in a bit, jon. kim jong-un making history becoming the first north korean leader to cross into the south since the end of the korean war in the '50s. eunice yoon is in seoul covering the latest for us. >> reporter: that was just one of many dramatic events that happened here on the korean peninsula today. probably the most fascinating was when north korea's leader, kim jong-un, walked up to a podium to address the press live on tv. he said he believed the north and south koreans were the same people and he hoped to forge a new path forward that deeply moved many south
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koreans here who have been wondering tonight whether or not this conflict that has been ongoing technically for decades could end in their lifetime. that sentiment has been enshrined in the joint declaration issued after the summit today both of the korean leaders said that they promised to end the korean war they said they wanted to move to a peace regime, set up a lee yeah yeahsle ye liaison office, and work towards disarmament and total denuclearization there was not an agreement on the definition of denuclearization in this statement, they're saying it's denuclearization for the korean peninsula, but not necessarily for north korea. so because of that, a lot of
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north korea watchers are saying that could give north korea an out. so why is there so much skepticism that's because since 2000 there have been two other summits, which also ended in peace declarations, and nothing came of it. so there's a lot of healthy skepticism here about whether or not the south koreans who have seen this before are going to be seeing the same problems again and the real challenge is going to be now getting this joint declaration that's all on pape into real life >> certainly a historic first step, eunice, with plenty of questions ahead. this comes ahead of german chancellor angela merkel's visit to the white house today. javere a little different than the grand welcome emanuel macron got
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earlier this week. >> that's right. we expect angela merkel at the white house in just over an hour's time. you can see some of the team usa olympians out on the front we might see the president there as well in a few moments welcoming them after that, angela merkel arrives for that visit here's the moment that will be overshadowing this this moment last year when angela merkel and the president had a frosty, inter-personal relationship he went in for a handshake he didn't notice or rebuff eed her. this is the moment everybody was talking about last year. this year they'll try to get past some of this frosty, interpersonal relationship and actually get down to brass tacks and negotiate. the president put out a welcoming tweet a few moments ago saying looking forward to pleating with chancellor angela merkel today so much to discuss, so little time it will be great for both our great countries.
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the question is whether or not the personal relationship matters with the president at all. we saw shinzo abe earlier this month with president, playing golf, having dinner, outings with the two wives some described it as a bromance, yet shinzo abe left empty handed he did not get the exemptions to tariffs he wanted. we saw earlier this week a 21-gun salute for emanuel macron of france, the discussion of the menus, very warm relations between the two men, yet he did not get the exemptions he wanted so the question is whether this frosty relationship with angela merkel matters when it comes to the brass tacks of what they'll be discussing when it comes to nato, climate change, trade. but this has been down played by the white house as simply a
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working lunch with the german delegation and angela merkel herself. >> sort of the personal relationship theme, but there's also the trade deficit to watch, which is a different story for germany than it is for france. germany is our fourth biggest trade deficit behind japan, china and mexico i wonder how much friction that will cause we know that's a point, whether it's true or not, that president trump focuses on and sees as an unfair trading advantage that germany has over the united states >> you see it played out in the auto sector. the president has been critical in recent weeks of german automobiles, saying you see german cars all over the place in the united states how come we don't see that vice versa in germany the president is focused on that that's why we don't expect to see him make major concessions to the german side here. we'll wait and amon javers at t
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house. thank you. when we come back, stocks looking to close out a wild week a look at how to handle all this market volatility and how a traditional retailer is faring in the amazon era. the ceo of signet on her transformation plan, bricks and clicks "squawk on the street" back in a "squawk on the street" back in a moment.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? if you don't like their answer, ask again at schwab.
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you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party.
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. amazon and microsoft are pushing the nasdaq higher. we also got the first read on u.s. gdp the economy growing at 2.3% versus 2.9% in the first quarter of last year this is going to be a good old-fashioned debate david thinks everything is going wrong and we're heading towards recession. bob, you think the s&p 500 will go up to 2,800 david, what's wrong with the earnings earnings appear to be better >> earn ng -- earnings are fine. i put in my note you can look into the past where earnings are good, where we had liquidity growth receding and that had a bigger impact on the multiple. i won't debate whether the earnings landscape is good it is. it's looking at the situation in
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the rearview mirror. interest rates do matter, everybody is focused on the ten-year, but it's just about the same level it was two months ago. people are not focused on the two-year note, which in the past two months has gone up 25 basis points so it's not just about the yield curve. the general level of interest rates are on the rise. and late cycle, that spells to me a market at best which will do what it's already doing heightened volatility and trading in a range >> "power lunch" has a great graphic where they do this tug of war between what's happening on rates which are rising, and then the better earnings, bob, and which one will win out and drive major averages is it fundamentals of earnings looking good or those rising interest rates on the short end? >> well, it's some of both i think we've had six straight years of pee p expack shnsion g,
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this year we have rates drifting higher, volatility drifting higher it's a tug of war, and earnings win, but i think stocks will be up more than earnings. what about the gdp number, david. looks good at the headline, if you go beflooet the sneath the , consumption is the weakest in years. where does that tell you where we are and if president trump will achieve the 3% growth target off of tax cuts >> you might get 3% for a quarter. i doubt very much we'll get 3% for the year i think you're quite right to me the big number beneath the number was the fact that consumer spending on big ticket durable items was down to the 3.3% annual rate you had residential construction flat consumer spending on nondurables flat
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you strip out inventories and export, the headline would have been 1.6 and this is the quarter where the tax cuts were being implemented. i think it's the same old economy we had all along call it roughly 2% we have not seen the full impact of the fed rate hikes kick in yet. the fed has more work to do. that hits the economy and the markets with a bit of a lag. what i find interesting is back in '08 into '09, all the bulls were saying don't worry about earnings don't fight the fed. don't fight the fed. i hear everybody talking about earnings, which is looking at the situation in the rearview mirror and moab is talking about fig fighting the fed in this situation. i would counter bob in the sense of look at consumer price index today. there was a situation where that was the only measure that mattered for the fed in the alan
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greenspan era. that was up at over a 4% annual rate in the first quarter, we have not seen that since 2004 that will crimp margins over the course of the next year at a time when interest expense will crimp margins, we won't get tax cuts every year. so i think you will find earnings expectations coming down over the course of the next year that's not priced into the market right now >> bob, really quick, to david's point, to the degree you're screening companies, how much are you looking at either their debt to equity ratio or their refinancing calendar they may have over the next year or two >> we're watching that you don't get a great picture when you do. that's a problem for later right now we're getting amazing earnings and to counter david we're getting amazing earnings revisions to the upside. he said down revisions there are no down revisions. estimates are moving up because the economy is reasonably good and the tax tailwind is pretty
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strong 15%, 20% earnings, that's good news we have pe pressure. >> we have to leave it there wanted to bring up that junk bond sale as well. we'll leave it there thank you. when we come back, watching the markets. dow down about 32. kevin johnson, the ceo of starbucks with us earlier today. he addressed that racial incident in philadelphia sparking a day of store closures at the coffee chain next month you'll hear what he told us exclusively when "squawk on the street" comes back after this. play "do it like this".
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[music plays] when everything's connected, it's simple. easy. awesome. starbucks reported earnings last night they met forecast while revenue was ahead. the coffee chain maintaining its full-year outlook but the outlook excludes the planned closure of stores on may 29th to conduct anti-bias training we talked with ceo kevin johnson in the last hour >> for that period that the protests and the incident occurred in philadelphia, certainly those stores were
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impacted for a brief period. but, you know, it's still early days we don't have all of the information on demographics, but certainly if i look nationally and i look at regions across the united states, there's not been a measurable impact that we can attribute to philadelphia. but certainly in the city of philadelphia during that period there was some impact. >> obviously talked about china and growth there versus here in the united states, along with the ongoing question of what you do how do you treat a customer who wants to use the restroom facilities but maybe not buy something. >> if you've ever been pregnant and you need to use the restroom quickly, you better have a starbucks that has a restroom open to the public it's tricky. i take jim's point for the bar wri dar rey barista to make a judgment call
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in a second. >> the s&p is now flirting with the flat line after those stellar results from many large cap companies last night let's go to our etf spotlight. jack deangelis is looking at energy stocks. >> the energy sector mixed today after that miss from exxon this morning. the top line beat from chevron higher oil prices have helped these companies, but the sector is not out of the woods. since this time last year oil prices which have been reaching for $70 a barrel are almost 40% higher that's a huge difference but 70 is not the same as over 100. energy etfs are mostly lower today as oil prices were dragging in the red. they just turned positive a few pennies now. look at the xle. that energy sector select fund down about a percent the xop, oil and gas exploration also down a percent as well.
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oih, the oil services fund trading slightly lower today the energy sector has been one of the hopes of the marketplace, one of the bright spots after having been beaten down the past couple of years with those low oil prices the s&p energy group is up a little more than 10% in the past 12 months, but down 3% in the tla three months we will have to watch this throughout the day, carl >> kevin o'leary picking chevron in the stock draft thank you. it's 30 minutes past the hour. time to get to sue herera for a cnbc news update good morning here's what's happening. a summit for the ages. south korean president moon jae-in and north korean leader kim jong-un holding the first north/south korea summit in more than a decade.
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the two leaders agreeing to end the korean war and calling for the denuclearization of the korean peninsula president trump tweeting he looks forward to meeting with german chancellor angela merkel today. and while french president macron spent three days in washington, merkel has three hours to convince president trump to permanently exclude europe from taxes on steel and aluminum and to stick with the iran nuclear deal. israeli troops firing tear gas at a group of palestinian protesters who gathered ath the gaza border. the protester tloos threw rockst the soldiers and the duke and duchess of cambridge picked a new name for their son. his name is louis arthur charles, and will be known as prince louis of cambridge. you're up to date. sara, back down to you i caught a picture of that baby, he's a cutie pie >> i hate those abnormal shots a
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few hours after giving birth, in heels and a dress. >> she's a hard act to follow. when we come back, former european central bank president jean-claude trichet joining rick santelli and what we learned about signet, an embattled company with stocks near 2012 lows "squawk on the street" will be right back you know what's awesome? gig-speed internet.
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you know what's not awesome? when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back to "squawk on the street". i'm carl quintanilla, with sara eisen and david faber. some names that had a nice premarket like intel are starting to give it back intel dipping into the red a few moments ago.
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we'll watch and see how amazon fairs as it is off the highs as well it was a massive beat for amazon amazon announcing that it is hiking the price of its prime membership >> annual prime membership also soon cost $119, a 20% increase on the current $99 that will go into effect may 11th for new subscribers, and june 16th for current members renewing the cfo noting that the value of prime to customers has never been greater but the cost to amazon has become high certainly the prime universe has grown since the last time amazon raised the price in march of 2014 back then 20 million items were available for two-day free shipping today more than 100 million eligible products. amazon also added two-hour free whole foods grocery delivery in ten cities, not to mention video and music content.
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the question is though, do customers think benefits have expanded enough to justify that 20% hike in price? netflix, various tears range from 7.99 to 13.99 monthly hbo now is 14.99 a month hulu is between 8 bucks and 12 bucks monthly. you could argue these services offer better content, none of them offer free shipping so when thinking about whether amazon's hike could hurt the growth of the program, it's worth looking at netflix a quarter after the streaming company raised the price of its membership, it added more customers than expected. the stakes are high here prime, remember, is the flywheel in the amazon machine. it gets more and more customers
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locked n in, spending more and shopping more often. >> all right thank you. let's get over to the cme group and check in with rick santelli with a special edition of the santelli exchange >> thank you i'd like to welcome former ecb president, jean-claude trichet mr. trichet, thank you for joining me >> pleasure. real pleasure, rick. >> all right we have a delay, so i will ask i two questions. this first question is the most common-asked discussion question on this trading floor for years. we had bank of japan today basically saying that they'll stick with their policy, maybe they're not going to say we don't care if we don't reach 2% for five years, they took that off the timetable. the issue is whether it's japan or the ecb yesterday, holding on to crisis-era policy in pursuit of 2% inflation. the question is, mr. trichet,
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what happens if a slowdown/recession occurs before that goal is achieved? what do these central bankers do what would you do? what would you tell our audience they would have to do if that condition arises >> first of all, it's a very good question. a very important one, and clearly a question for all of us, not only would i say for the europe pean and japanese, the question is do you have ammunitions when the time comes for countering recession episode in the cycle so i would say at this stage it is good that the sticking to the goal and the definition of price stability of 2% is pursued i would not comment too much on japan for obvious reasons. but on europe i would say growth is there now even if there is
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perhaps a very small and slowing down in the first quarter. the inflationary pressure, it will come, are coming. in any case, we're not in the situation of the japan the ecb is expecting around 1.5% of inflation in the following part of the year so i think we are not that far away from the per spespective o being credible at the 2% level it's not only what you observe today which counts, but the expectations for the medium term inflation. >> thank you i'll tell you, many traders are sweating that. i like your answer it's still not raising a lot of confidence levels in my brain. the second question is many times in the past when you have been interviewed you say you
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don't like central bankers kind of being the masters of the universe on mount olympus doing things you would rather they use words more than action, called macro prudential measures. the problem is after sticking with basically policy there's a are not delivering for so long, my final question is do you think words are going to work when actions that are put on never get taken off until another crisis arises? >> again, i agree with you that what counts are the facts. take into account the fact that the fed and the ecb and other central banks avoided a great depression, which was very much in the cards at the moment, so that is a success. then we strive to get growth and i would say a steady growth as possible which is coming or has come.
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so i think that we should not say that the central banks have failed the central banks have done a very good job. but of course they cannot do everything they are not the only game in town we need all the other partners, namely government, parliaments, and i have to say the private sector itself. but let's accept that central banks did quite a good job and i am absolutely confident they'll continue to do so. >> thank you jean-claude trichet, thank you for sharing your thoughts. these are huge topics for all markets moving forward sara, back to you. >> rick, thank you very much let's get over to headquarters, contessa brewer has a quick news alert >> matt maddox says he is ready to change the boston property from wynn boston harbor property to encore boston property.
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he is testifyingabout whether steve wynn should be removed as a qualifier. steve wynn has sold all his shares, resigned as ceo. matt maddox has laid out the ways he is trying to distance himself from his predecessor one of the moves is to now surrender to the need to change the name to encore that's the name of their other hotel in las vegas, sara >> thank you very much watching stocks here, losing some of those early gains. nasdaq negative. amazon's big gains have been cut in half after that blowout quarter. when we come back, attempting a retail turnaround in the amazon era. after a shake up at the top, signet is looking for a change rsu'll hear from the new ceo, fit interview since taking the helm that's next.
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anyone can get you ready, holiday inn express gets you the readiest. because ready gives a pep talk. showtime! but the readiest gives a pep rally. i cleared my inbox! holiday inn express, be the readiest.
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apple sitting in correction territory ahead of the earnings next week. how nervous should investors be? find out on cnbc.com more "squawk on the street" after this
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. it is a company and a stock that is attempting a turnaround. signet jewellers, the retailer known for brands like kay jailers, zales, jared and piercing pagoda to name a through, the former ceo stepping down in the midst of a sprawling gender discrimination lawsuit. i spoke with the new ceo, virginia drosos, and asked how the company is approaching shaking up its culture >> signet is now on what we call the path to brilliance it's a transformation plan a bold plan to help us redefine what it means to be the category leader we launched it last month in our earnings call and i'm pleased to
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say we're seeing some green chutes of positive growth from that our sazales brand has two quarts in a row of positive comps we're getting back on track. we're changing our culture to be one that's more agile and efficient. >> when i talked to analysts and investors about this company, i hear two narratives. once, it's a financing company that's a hard business to be in. two, it's a mall business, that's a tougher business to be in right now with the trends in retail how do you combat those narratives >> i define our company differently. we delight consumers by helping them celebrate life and express love we offer credit as an opportunity for our customers to purchase their jewelry in the
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best way i'm proud that we do that we make our jewelry accessible to all customers. but we're not a financing company. we have announced that we have outsourced our credit and so that's off of our balance sheet. we're single mindedly focused on being the most trusted, most innovative, customer focused innovative jewelry company on the planet >> how exposed are you to the mall >> we have a broad footprint in high performing malls. that's a good thing. we have over the last number of years been proactive in our real estate strategy. we closed a couple hundred stores last year we announced we'll do the same this year. far and away the vast majority of our stores are profitable and we've begun to establish a small off-mall footprint in addition to our mall footprint. let me tell you what's important about that ku customers in the jewelry business are on an omni channel
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journey. >> even with engagement rings? they don't have to try that? >> they do more than 40% of the time they start their journey online, doing research, understanding about the four cs, different colors of gold, shapes of diamonds more than 90% of time they buy in store they wanted to buy from a company they trust and a jewelry consultant who has helped them find the right product >> what have you learned about millennials that changed this business, the way they date, propose, marry and shop for rings? >> there's certainly things that are different about millennials but a lot of things are the same as their parents for example, munillennial consumers are equally as likely to get engaged with a diamond engagement ring, but just three years later. and 40% of our shoppers for bridal jewelry already have children they are on a less linear path typically than parents were, but
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that, to me, is a disruptive opportunity for us how do we make jewelry available maybe even in customers homes, maybe with a bridal concierge service. >> can you give us an update on the lawsuit we've followed with thousands gender pay and promotion problems we need to know. >> of course, sara, i can't speak directly about ongoing litigation that's not possible. what i can say is that it's very important to me to lead a company that's focused on integrity, respect, equal opportunity for all people and really has diversity and inclusion at the core of who we are. it's part of who i am as a leader i have a track record, my entire career of building diverse teams and i know, because i've engaged in the data that signet very clearly has equal opportunity. we pay women equally for doing the same job, same level
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experience as their male counterparts. >> you also brought very high-powered females to the board. >> we have we're a women led company and women power ed company 68% of our field leadership, now more than half of my c suite are women. we have one of the most diverse boards of any company with more than half women. what's even more important to me is that we are very great professionals who are fully capable and excited about turning this company around and getting it transformed. >> our thanks to virginia drsoso, new ceo of signet. she has a long to-disdo list, not only changing the culture and the company. this was a shorted stock. >> it is down sharply over the last couple of years. >> down to 2012 lows so, she's xpmg, ran their beauty business hasn't really been in the
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discretionary space but clearly has a whole strategy some of the consumer insights are interesting, that millennials get engaged three years later than the previous generation and 90% of people getting engaged, the man buys the engagement ring. that is still purely traditional. >> 10% the woman buys them >> buys their own engagement ring. >> it never occurred to me that was a possibility. >> equal opportunity. >> yes. >> actually, i asked her if the scandal and the lawsuits were hurting perception among women and hurting sales for the company, something that's been written about. she said not really. what you're seeing is more women buying their own jewelry yes, this is a whole new generation, guys. >> an important interview for her, right first time she communicated in that way, right, sara? >> yes. >> given all the controversy you were discussing with her, to a certain extent. >> yes she has only been on the job nine months, took over in august she clearly has her work cut out for her.
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the first quarter did not go well analyst nous mas now make the c- clearly she has a lot to say in terms of the strategy, closing stores, refreshing stores, catering to a whole different audience of course, the biggest thing is changing the culture inside. >> not easy to do. certainly not overnight. thanks, sara let's get over to jon fortt for a look at what's can coming up on "squawk alley. >> we'll have the chief financial office, bob swan, on exclusively. "squawk alley" will dig into this manufacturing headache they've been having and also the success they've been having in e oud. that's coming up in a few that's coming up in a few minutes. from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytic
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♪ south l.a. is very medically underserved. when the old hospital closed people in the community lived with untreated health problems for years. so, with the county's help we built a new hospital from the ground up and having citi as an early investor worked as a signal to others to invest. with citi's help we built a wonderful maternity ward and we were able to purchase an mri machine.
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we've made it possible for the people who live here to lead healthier lives and that's invaluable. ♪ let's get to dominic chu for a sector flash hey, dom. >> are they at play given what's happened to interest rates specter, we've seen volatility as of late four names within the 28 stocks in the s&p 500 utilities index could have double-digit price
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appreciation in the next 12 to 18 months if analyst corrections are correct. ppl the highest at 13% there, carl back to you guys. >> dom, thank you very much. president, of course, at the white house today, meeting merkel, as well as some olympians. according to reuters just now, says he will meet with north korea's kim in the coming weeks, hopes for a day when all koreans can live together on a denuclearized peninsula. when we come back, a lot more on a. amazon's blow-out quarter. giant ipg ceo will join us in a moment
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♪ today is a good day to make a plan for your financial goals and your everyday ones too. pnc can help. we'll be with you every step of the way. let's start today.
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anyone can get you ready, holiday inn express gets you the readiest. because ready gives a pep talk. showtime! but the readiest gives a pep rally. i cleared my inbox! holiday inn express, be the readiest.
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good morning it's 8:00 a.m. at amazon headquarters in seattle. it's 11:00 a.m. on wall street and "squawk alley" is live. ♪ the prime time of your life the prime time of your lif

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