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

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shoots you to the place. then your elevator would come back up. >> so still a while. >> much easier to go above and fly, except you'll likely die. down there, you got to drill a lot of tunnels, but you might live but i don't know >> there are also, by the way, issues about tunnels themselves. how many tunnels you have on top of each other. you'll have to have thousands of them >> think about fracking. >> maybe they know on "squawk on the street" because that's where we're going. make sure you join us on monday. here's "squawk on the street." ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. s&p is on track for the best weekly gain in a couple months a lot headed our way this morning. a white house meeting with
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automakers europe has some mild losses. oil is unchanged road map begins with tech on a roll apple hit a fresh all-time high. facebook back above its pre-cambridge analytica levels, but one pension fund is out with bold claims against the company. >> shares of nvidia are falling in the premarket, this despite what was a very strong quarter we're going to hear what the ceo said about that quarter and his predictions on driverless cars dropbox shares sinking this morning after its first earnings report as a public company we're going to look inside that quarter. but first up, stocks are poised in the midst of the dow's first six-day win since the beginning of february. s&p on pace for the best week in a couple months. nasdaq has posted five straight positive sessions. jim, if i see another piece about how we busted out of the descending triangle, what does it mean and how do we know it's not another head fake? >> i think we don't know it's not another head fake, but i would say that the absence of news about trade, trade war has
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made it so that a lot of the traditional semiconductors join f.a.n.g. f.a.n.g. obviously very much in the lead it will be interest to see whether facebook is fazed at all by these corporate governance issues but the shorts -- believe it or not, you could have almost trillion-dollar companies that are shorted. $700 billion companies that are shorted. so apple, amazon, facebook were all shorted. i think that people kind of capitulated yesterday. there was a lot of capitulation. people just saying, that's it, i can't take it, go buy some apple. because you had a one-two punch. you had the better than expected quarter on may 1st then you had warren buffett come in when people thought it was about to start going back down then you've got the race to a trillion that everybody is talking about. >> although we've backed off a little bit we were at 950 billion doesn't take much. 5 billion shares out but we were getting very close i think it was early this week
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we were within less than ten points. >> but you're starting to get a consumer products multiple and why not, because it's got a service stream that is just getting bigger apple pay, goldman card. >> yeah, there's been some chatter about 15 basis points for apple on apple pay transactions could double, the journal says, perhaps on this new deal >> entirely could. there's a lot of people who do apple pay. forced my hand people love it >> so we know the power of these big, large-cap tech companies to move these indices over the past is it broader than that though what about criticisms that it's all about seven companies on the ndx? >> if you say that, then have you explained things like the cloud kicks? look at the cloud kicks. look at sales force. look at workday. look at bm ware. look at service now. look at new relic. look at adobe.
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these are the companies that on board the cloud. this is a cloud move that is what's driving this. and we're going to get to nvidia, but i am sick -- i am going to bark and bite at the people who knock nvidia. we'll get to that later. >> we will amazon web services was on earlier. he talked about how many companies still have it on premises >> it's happening so rapidly >> absolutely. i asked him what the biggest constraint to growth is. he said inertia from companies who haven't yet even considered what it means to be on the cloud. >> whole verticals are now on the cloud. and when they get there, i think you're going to find that everything involved in the cloud is completely constrained, whether it be they can't build the data farms fast enough or they can't get the chips fast enough, despite the nonsense
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about nvidia not having sold enough chips you know who nvidia's clients are in the data center how about amazon how about google >> and microsoft >> how about ibm, azure, oracle. well, that's called five for five but there's some clown analysts -- i didn't mean to say that total joker, chowder head analysts who are saying they didn't hit the number. >> they should go pound sand >> they're sand pounders this weekend. i'm going to go to montauk, where you like to go >> i used to, yes. >> i've had it >> chowder heads >> bring me the heads of the analysts who said that nvidia didn't do -- how about these guys nvidia falls after prediction decline in cryptocurrency. how times did i say my dog was going to be beaten up by that? right up to the bell >> 205 crushed 147 data center revenue up 71.
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they did say demand for crypto, as you highlighted earlier in the week, would be down in the current quarter. jenson huang talked about that on the call. >> the largest opportunity for us is actually in the cloud in the data center. that's the first -- the first great opportunity. the reason for that is there's just an explosion of number of different types of networks that are available. there's image recognition. there's video sequencing there's video -- there's recommender systems. there's speech recognition, speech synthesis, natural language understanding there's just so many types of networks that are being created. >> people know that's alexa. that's google assistant. that's the adobe where you look into it and go like this and it completely gets your image and you can create cartoons that used to take months.
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it's the idea that a video game can think about you. so this is the great next frontier that does not work, as jensen said repeatedly, on the traditional semiconductor. >> okay, but back to this concern, if you want to call it that, that two-thirds of the beat came from cryptocurrency mining the idea that, you know, there's concern they oversold into this market and that could sink gpu game sale chips. >> okay. they're going to have 3.1 billion. >> you could turn around if you're a crypto miner and sell your chips to the game people. >> it was 289 million. remember, this is a company that will do $3 billion next quarter. it was 289 million it's going to drop down to one-third of that. he was incredibly transparent.
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and i say even if you back that out, you had a monster quarter this company is responsible for a lot of value cap added, mostly because it is that big let it come in it went up too much. i hated the fact that it ran it ran because people felt that maybe this crypto number would be even bigger there was no sign of that to be happening. this is what happens when you get these people who just don't believe that crypto can ever cool off it can cool off. it did >> almost $160 billion market value for a company that only a couple of years ago was not even on the radar >> look, they dominate in all autonomous cars. they dominate in the data center gaming is the fastest area they're talking about these games where you play against a hundred people they all need nvidia all the new fancy video games that are so hot, if you look at the video stocks they're all breaking out
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all need nvidia's chips. nvidia is leaving everybody behind >> gaming revenue up 68. >> that's incredible >> and jensen talked about autonomous cars, a market that obviously we're just starting to crack. take a listen to that. >> we see a great opportunity in autonomous vehicles, both in the creation of autonomous vehicles, and i've mentioned between now and the time we ramp our av computers, we call drive, we're going to be selling a whole lot of servers so that companies could develop their network models for their self-driving cars as well as simulating the virtual reality. >>. >> 130 million passenger vehicles and 10 million robo taxis, and the thinks they'll be using nvidia >> will his chips also be in
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these robots that are going to make us slaves did you see that one did i show you this guy running around >> that used to be owned by, what, google >> is jensen going to put these chips into the machines? >> jensen is a responsible member of society. no, these are -- his chips -- i don't know if they're in that. my understanding is that we've focused on the various ones that are bigger markets >> i like the one where it hops over the log you know how much force you need to lift that much metal over that log >> i actually don't, but i would imagine it's a lot >> these things are strong >> i don't want to see one of those guys running through my yard >> no. >> no. >> no. >> i'd prefer watching a bear. >> jensen is more like john connor remember john connor >> i remember it but you also remember how it all ended. >> with jensen huang, it ends in
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utopia >> it's probably going to end more like the matrix we'll all be in little pods. >> providing battery life for the universe >> battery life for the machines >> dropbox is lower in the premarket despite better than expected quarterly results in its first earnings report since going public, the data storage company saw a 24% jump in paying subs to 11.5 million >> look, that's another one. the stock is down. i thought that was a remarkable quarter. dropbox, here's my thinking. revenues were above estimates. dropbox may be part of this new move that i see along with spotify. they say they're going to do x and do x in other words, they don't practice underpromise and overdeliver. they tell you what they're going to do and do it. spotify did that and it hurt their stock. of course, spotify is right back to where it was. dropbox did it, and it hurt their stock. it's still right back where it
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was. that's kind of like -- i like the idea you forecast x and do x. that may be what we're going back to, which is okay >> it's fine >> first was symantec. >> that didn't go as wuell. >> that was suboptimal one analyst says wells fargo, something just doesn't add up. morgan stanley, this is my favorite, pleading the fifth that symantec conference call is other worldly. we did this great, we did this great, we did this great, but oh, by the way, we contacted the s.e.c. and the audit committee as their own counsel you know when the audit committee has their own counsel, that's a sign that perhaps the people at the top need to be investigated >> one other name we may want to keep an eye on is game stop. the ceo just resigned for
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personal reasons that's all they're saying. personal reasons we'll keep an eye on that. >> stock has halted. >> that often happens when stocks are going down, not when they're going up >> we'll watch that. might get news in a bit. when we come back, it's an important day for the pharma sector president preparing to unveil his plan to lower drug prices. we've gotten some clues this morning. we'll talk about that. another look at the premarket. dow is aiming for seven days up, longest streak since november. back in a moment ♪ you said you're not like me, ♪ ♪ never drop to your knees, ♪ ♪ look into the sky for a momentary high, ♪ ♪ you never even tried till it's time to say goodbye, bye ♪
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so sophie, i have an xfi password, and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. looking for some details on the news out of game stop that ceo mauler is out. resignation not due to any potential fraud, but he's not entitled to any severance. stock is still halted. >> stock has been on a downturn for a long time because it represents physical gaming there's some hardware involved in gaming, but the games themselves are all downloaded through the internet that's one of the reasons why nvidia has had such strong -- >> the ceo just took over in
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february now daniel de matteo is going to be taking over he's one of the co-founders of the company. >> obviously electronic arts have amazing quarter, but they're all downloaded that has been the -- >> there's only one video game that matters right now it's called fortnight. that's it. >> mentioned several times by jensen >> it's probably taken away a lot of time spent from other games. >> that's why electronic arts were so heavily shorted in the quarter. people felt that fortnight had taken away from call of duty, for instance but jensen mentioned fortnight has been an incredibly exciting game >> what i've seen of it, watching my son play with all his buddies, yeah. >> we had a kid on the other day. professional player practically. >> who was the baseball player who said yesterday -- >> david price >> yeah, david price >> got carpal tunnel from
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playing. >> my wife and i septembnt thato our son. we wanted him to look at that article. meanwhile, the president is expected to talk about drug pricing later on this afternoon. we're going to turn to ayman javers for news on that. >> reporter: good morning. i want to bring you news head lines just crossing. this coming from reuters, which has obtained a memo related to at&t's hiring. the newsbreaking earlier this week of michael cohen, the president's personal attorney in 2017 and 2018. here's what reuters is reporting now, saying that at&t's randal stephenson says he takes responsibility for the failure in the vetting process with the cohen hire at&t saying it hired several consultants to help understand how the trump administration might approach a wide range of issues, including that time warner deal that the company has been so focused on at&t's head of external and legislationive affairs bob quinn is retiring, according to this memo obtained by reuters
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at&t's hiring of michael cohen as a political consultant was a big mistake. that's in an employee memo to at&t that was obtained by reuters also this morning, "the washington post" reporting new details on exactly what they hired michael cohen for. take a look at the headlines from "the washington post" this morning. you'll see that the post is reporting that they've got new documents from inside this deal in which they say the company referred specifically to hiring him to deal with the proposed merger with time warner. that's according to those dock yumt yum -- documents obtained by reuters. they said in early 2017, as president trump was taking office, we hired several consultants to help us understand how the president and his administration might approach a wide range of policy issues important to the company, including regulatory reform at the fcc, corporate tax reform, and anti-trust enforcement now, that raised a lot of
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questions, particularly because michael cohen is not a well-known fcc or anti-trust expert what exactly what at&t hiring the president's personal attorney for here? the post is now reporting for up to $600,000 in fees during the course of that year. now the ceo of the company saying it was a mistake. he's joining the ceo of novartis who said hiring michael cohen was a mistake. it was an embarrassment for that company this week when those details were reported. a lot more on the personal business here of the president's personal attorneys, guys >> watching for that as it relates to ovartis and the pharma talks others reporting at&t was the first to come out with bonuses post tax cuts. >> i think this reflects the unsettled nature of anti-trust
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made it clear he's not a believer in behavioral remedies. but i think it does point to that larger issue of, well, the president was very critical of cnn. he congratulated rupert murdoch on the deal with disney. what does that mean? he hates nbc what does that mean? i mean, companies have to look at a broader array of things than they might otherwise have in the past and perhaps they go to lengths they would not have in the past in order to try to get better insights. >> right randall stephenson obviously regretting the hiring. my problem is, as david says, you're faced with a gigantic case by the justice department you want everything, every bit of knowledge your first thinking is to say, well, this guy is dirty, so to speak. you're thinking is, hey, maybe he's saying he's got insights. buy him. >> throw him 600 grand >> mistake >> see if it has any impact at
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heart. this is roman shaw who says don't be a bone head the tesla bull case revisited. one of the shortest talks. however, we believe that over the next three to six months, the narrative on the company will shift from insolvency risk and cash burn to market opportunity and growth, $500 price target, $100 billion valuation. david, calling for a short squeeze basically. >> wow >> yep, calling for a short squeeze. and elon is a visionary. >> there's no doubt he's a visionary. >> no one doubts that. >> whether or not they can deliver on his promises is another question >> now, this is the kind of call which the shorts are going to say i can't believe it this is just so ridiculous, as they do. but i've always said this is the biggest battleground stock in the marketplace. and it's not about tesla it's about the longs versus the shorts i think that this call, if acted
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on, could cause a spike, even though i think that's unfortunate. there's a lot of retail investors there, and someone is going to get hurt. someone will get hurt. tesla. >> okay. well, we got an opening bell a few minutes away stay with us "squawk on the street," we're back after this.
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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in about a minute on this friday. busy day as the automakers meet at the white house president giving a big speech on drug pricing later on today. we've talked about nvidia. now getting this memo from randall stephenson to at&t employees saying in more detail, there's no other way to say it, at&t hiring michael cohen as a political consultant was a big mistake. the vetting process clearly failed, and i take responsibility for that. in a statement, they go on to say that cohen approached our external affairs organization during the post-election transition period, and said he was going to leave the trump organization and do consulting for a few select companies >> he was approaching a number of different people with consulting services.
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i know a number of hedge funds who were also approached >> really? >> as a proposition of would you like consulting services they didn't take it. >> there's the opening bell at the s&p on the bottom of your screen over at the nasdaq, sit's servie oncology >> these oncology companies very much in the news, obviously. some companies have paid too much is what people feel they've overpaid for some of the smaller ones where the results might be very far out. it's interesting to read what the president's talking about. everyone is figuring out how to rein in some of the costs of these drugs. the drugs are life saving. that's hard to put a price on. >> there's also an argument made by those who support and believe
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in the pbms that they have driven prices down, that they're an effective way, the pharmacy benefits managers, are an effective way to drive prices down due to pbms and negotiative prices when you include the impact of generics, i'm told down 2.5% down 2.5%. there's a handful of drugs, though, jim, that we have focused on that have soared in price. >> look, the orphan drugs, they basically have niche businesses where there are a very small number of people who have a disease, and you can charge a lot for them you're protected but a lot of these are because otherwise the chronic protection from -- it would cause cigna a fortune over the years look at that pill.
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>> the one that cured hep c. $84,000 and then you're done the cost to the health care system for someone who conceivably had hep c was far more. >> i'm pro pharma. i just feel like they do a lot of good. >> the hints we're getting this morning is the impact will be modest on the domestic sector. he's going to go after foreign governments who might pay less than the united states azar says 50 changes, some of which will be disruptive so we'll see what the president says at 2:00 >> there are a lot of people who felt that at one point, the president would use the bargaining power of the government at one point they'd be like the va, which gets great prices. it's a very complicated issue. the pbms, who's trying to keep the prices down, who's really gouging, who's shkreli whenever you have that niche
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group, it's very difficult because you don't have a lot of companies that want to make that drug >> right well, the orphan drugs, or the drugs for very small patient populations, but that's become a popular thing, as you know look at shyer. $62 billion. >> yeah, and they've got a hemophilia drug. >> it's going to cost a lot. >> these drugs cost billions of dollars. they cost billions of dollars, and then when they get to face, sometimes they fail. it's much or after shots on goal, as i like to say a lot of these things just fail after they spent fortunes on them shouldn't they be compensated. >> you can expect the pharmaceutical lobby to fight back here, in terms of pointing out their version of facts, which is actually i'm seeing
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here again some of their stuff, patient out of pocket cost for brands and generics have decreased since 2013 in other words, per person >> then you get an epipen issue. another company had made it. they had to pull it. the one i had was pulled it was a really good device and got pulled your blood pressure is 80 s/50. >> show must go on nothing stops you. >> that's a lightning round. i spent the night at the hospital i came back the next day i was fine >> walk it off >> it was fine >> verizon is leading on this -- i guess on this upgrade over at jpm. they go to overweight. they keep the target at 58
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they met with mick adam. they say they're more confident they will not be distracted by any large deals. >> i think it was good mick adam meeting with jpmorgan. is that better than at&t meeting with cohen >> yes >> okay. >> undoubtedly that is better. they go on to say 5g, which we've talked about in the past which has become a hugely important issue in t-mo and sprint's desire to get their deal approved by the u.s. government in terms of what they're going to do for 5g they say it's an unpriced option at this point with more clarity coming they do express skepticism on verizon's ability to truly leapfrog its peers in the mobility landscape using 5g any time soon. >> really? >> but i look forward perhaps -- you know, hopefully we'll talk to about 5g >> i don't think people thought
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the t-mobile stock would have been hurt as badly >> if you look at it over the last couple of weeks since they announced the deal, it's been a poor performer not good >> no, no. that was an ill-advised move >> and i don't think they've hired michael cohen. >> i've been using your number all the time i like to take your guess. i like to crib your numbers. we're competitive. >> no, we're not competitive you just beat me over and over and over again >> it's like the phillies. >> it's not competition. >> no, we're all good. it's all good. >> some eyes on symantec here. down 30 plus >> how about the fact there's an investigation and the numbers may not be able to be relied on. down ten, i don't know geez, it was voluntary
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it wasn't like they came in and s.e.c. swept in and looked at the records like the fbi it's very cynical, by the way. the conference call is about how great the quarter was. if you felt -- that's like, hey, mrs. lincoln, how was the play, right? >> is the lead director of symantec the ceo of paypal >> i know that dan's on the board of paypal -- i mean symantec maybe the lead director is exercising some discretion there. >> could be. >> as opposed to being a houseman >> wonder what the problem is. >> i think it has to do with -- >> you think it's revenue recognition? >> oh, my god, revenue recognition. the problem is -- we just know it's not going to come out i don't want to jump to conclusions. it was a good quarter. i don't know whether the stock should be down that much
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>> you've always said that >> nortel killed a year for me >> you guys, we had the downgrade of macy's earlier in the week today it's kohl's turn they go to neutral cold weather risking q-1 comps, competitive later in the year. >> why do we own it? by the way, they mentioned bond time closing it good for calls they have similar strip malls. why do i like kohl's so much, other than fact it's been beating the numbers, never closed its doors and has a balance shield that yields more than 4%. i like it because it also has a deal with amazon where you can return things. you have to go through kohl's. this is not in all the stores yet. this is how you take back things now, we go and wrap them up and deliver to this person and wait in line to return things i think probably a quarter of my
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wife's time is spent doing that. if we had a kohl's, boom, go right in right in the strip malls you like the kohl's, the housewares section, the fact nike has their -- >> love the kohl's i once was in a kohl's i was. >> you were? >> yeah, we were skiing in utah, and we decided we needed sun >> there's no kohl's in utah >> i thought it was a kohl's >> no, there's a kohl's. >> we bought warm-weather clothes. >> i have kohl's cash. >> shorts and t-shirts at a kohl's >> kohl's has the best selection of socks in the world and everybody knows it, okay okay okay >> okay. >> is this the one where they would or would not give you a credit card? >> there were 12 people behind me and they denied me credit it was one of the more embarrassing -- hey, booyah! if he's really that good, how come he couldn't get credit at kohl's booyah >> is that what you say when it's not good? booyah >> speaking of retail and
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shipping, you see this usps q-2 loss, 1.3 billion. double a year ago. but shipping and package revenue up 9.5, which offset a decline in first-class revenue >> the amazon people are adamant it was a very good deal for everybody. obviously they sent a lot of packages on sunday that was the deal. the united states government would deliver every day. some of these companies didn't want to do it. fedex, i think, is -- the company that's the winner is xpo logistics. that's the company to watch. they had the best quarter of the group. >> morgan brennan is listening to the post service call might have some details later on >> i was trying to talk to her during it to talk about how david's come on strong, and she was not listening. she was listening to the call, which i thought was more valuable than listening to us banter >> i think that's always the case hopefully our viewers don't feel that way though. >> they don't really understand
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the innards of this warfare we have honestly, i want people to go to the conference call. everything is great, great, great, great, then they say, oh, by the way, we're not going to be able to report because the numbers are basically made up. >> internal investigation in connection with concerns raised by a former employee committee has retained independent counsel. >> well, that's what does it i want people to understand that when the audit committee retains independent counsel, that means there are people on the board who say we have to go -- the audit committee basically is the internal prosecutor at that point. you only do that when you expect it perhaps at the very top there might be chicanery sometimes they're exonerated that's a very serious thing, when the audit committee has outside counsel. >> s&p adding a couple points. let's get to bob >> hello, carl
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happy friday, everybody. it's a modest gain, but what an amazing six days that jobs report last friday, everything turned around on that take a look at the sectors today. sort of a mixed open materials and banks. consumer staples basically flat on the week. they've stopped their decline. that's a good sign health care is modestly to the upside i would note it's not a lot of moves in the pharma names. awaiting the president with his announcement on drug policy. but all the major pharma companies are just up fractionally, as you can see here but what a turnaround it's been. remember all the concerns about the bears gaining the upper hand and the narrative. it all stopped a week ago. we've moved 103, 104 points in the s&p since last friday. we were at 2622 or something like that at the open on friday. that was the jobs report we've just been straight up six days in a row since then, more than 100 points here there's been a change in tone since then we again talked about the bulls sort of trying to regain control
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of the narrative so you have tech and financials that are leadership groups that's the biggest groups in the s&p 500. when they're up 4% and 5%, the whole s&p is going to be up 4% and 5% that's exactly what's happened the oil rally has been helping yields have stopped going up inflation data at ppi and cpi has been subdued and the dollar rally we were very worried about a week ago has kind of paused in the last few days i think that's supported the market a little bit as well. so the market leadership group, as i mentioned, has been technology and banks, if you look here. when those two are up on an average of 5%, the s&p is going to be up close to 5% that's indeed what's happening energy is helping, industrials a much bigger sector, that's another factor in what's going on right now we've talked often about the 25% gain in earnings for the first quarter. huge number. people have asked me, how much are the tax cuts contributing? well, an interesting note this morning addressing that.
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we have 25% earnings growth. where does that 25% come from. 8% comes from revenue growth that's about a third from revenues the margins are another third. here's the interesting thing tax benefit, 7.6% of the 25% so about 30% of the gains we're getting from earnings are coming from the tax benefit 1.5 out of that 25 in buybacks that's about 6% from buybacks. so tax benefits and buybacks are contributing nearly 40% of the overall earnings growth that we're seeing that's very significant. of course, the benefit of that tax will not be seen as much next year. that's why we're going from 20% to 10% earnings growth still, very, very significant numbers overall. we've got a big ipo. we have a lot of bright chinese citizens here today for huya
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we're looking right now at 15 million shares at $12. that was the high end of the price talk $10 to $12 here. this is the number one livestreaming, game streaming platform over in china no indications on that yet but it looks like it probably will open to the upside. finally, on yesterday's big ipo, biggest ipo of the year, axa did price below the range. 24 to 27 was the talk. priced at 20, opened at 19.50. as you can see, it's been steadily moving to the upside after a disappointing open and trading below the initial price. it's now trading right at its high since going public, $20.75. we're at the highs for the day dow is up 85 points. carl, back to you. >> okay, bob see you in a bit let's get to rick santelli as well in the bond pits at the cme in chicago some day that coming in about 15 minutes. hey, rick. >> oh, absolutely. we always like to monitor the feel-good indices as we get our preliminary read on university of michigan coming up. if you look at the net changes
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on an intraday basis versus yesterday, twos are unchanged. fives are unchanged. tens are down one. and 30s are down one but here's the key look at these maturities' changes on the week. two-year up three. five-year up five. tens up one. 3 30s down two, which affects all the spreads. you can see the two day of tens there. we're still drifting what's notable is where we drifted from the 3% we flirted with intraday and on a closing basis but didn't take out 303. open the chart up to february 1st, notice the left side and the right side the 295 much lower, of course, than the right side. but the right side failed to take out the high. contrast that with the look of the longest maturity, the 30-year bond notice the different variation and distance between the left highs and the right highs. the tens look a little topee
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the 30s look a whole lot more toppy. 42 basis points. maybe 30s minus fives is the one. fives are up five on the week. that spread now trading 26, 27 basis points another cycle flattened us on that trade today the dollar index is not the star it's been the star being the star means a good upside it's had that. but it's starting to drift you see it on the one-week chart. as a matter of fact, we're now down on the week we're now trading in the 92.30 that's only a fifth or so away from an unchanged year we really need to pay attention to that level, whether it holds or not of course, we'll be getting ready for the michigan to see if it moves the markets carl, jim, david, back to you. >> all right, rick see you in a few minutes rick santelli. when we return, rbc's mark
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mahaney with what he sees ahead on the tech rally. back in a moment
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take a look at the run the dow has had over the past week positive year to date for the first time in about three weeks. fewer than 200 points from 25k haven't hit that scearin mch 16th we'll get stop trading with jim in a minute.
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xfinity. the future of awesome. stop trading >> sometimes you get a stock up more than 30% and it's not a takeover that's the story of tradedesk. 61% growth massive margin improvement what they do is advertising on tv, but -- i mean on the web basically, they do the advertising for -- they plan your -- plan for connected tv, which is really interesting because you know there's advertisement connected tv but they're saying -- they say that the marketers are going to the web. digitals become the leader
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instead of the necessary but not sufficient side kick they're saying digital is passing tv and that they are ready to make the money. and it's really very daunting if you are on the conference call and in the tv business, you're saying, i didn't know it was eclipsed already they're saying it's eclipsed already. $700 billion market and digital is going to be far bigger than tv because it's where the eyeballs are so you read it and you weep. nvidia, symantec, tradedesk. in other words, stay away. >> kohl's. >> all negative. i didn't have a single positive today. no, i did. i didn't hire michael cohen. >> that's true >> bernstein on tyson, i guess >> yeah. >> outperform. >> tyson, i thought, tyson -- that stock is inexpensive but they had some raw cost problems. i think there's improved consolidation coming >> you do? you may be right >> there just has to be. too many companies in that
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business not too many making money. >> what's on "mad" tonight >> i've got nice could be like the next prove point. and then prologis. they're putting together the big -- this is last mile, you need prologis. they're accumulating other companies. and warehouses are so powerful like because of e-commerce and because of amazon. they've got to get it to you that day you need the warehouse close by. amazon or amazon as my friend says. >> and renaissance he likes the crown how are you doing? >> i like the crown. he watches the crown over and over i think he's in the crown. >> it's on amazon. >> the crown is on amazon. >> jim, we'll see you tonight. >> he's my friend. >> of course no question. >> james bond is my friend and will frostman.
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good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and the dow is up 100. s&p up almost to 2730. s&p on track for its best weekly gain more data is on the way. let's get to rick santelli >> yes, our preliminary may read from the university of michigan. in a couple of weeks we'll toss this with the final number 98.8 a little better than expectations but darn close to being in line. if we look at some of the other aspects to this, like the one-year inflation outlook, it moved up a tenth from 2.7 to 2.8. the five to ten-year inflation outlook stayed the same at up n 2.5. 98.8, how does that factor in? it's exactly the same as the last final read for april and prior to that, march 101.4 was
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the best read going all the way back to january of 2004. interest rates are mostly unchanged on the day, but exaggerated features on the short end being high or the week does underscore some of the rapid flattening we've seen on the yield curve. carl, back to you. >> thank you, rick santelli. our road map starts with big mistake. that's what at&t's ceo is saying about hiring trump's attorney michael cohen. we'll take you live to washington for the details >> apple's march to $1 trillion. the tech giant closing in on an historic market cap milestone. what will it take to get the rest of the way? plus $100 oil. bank of america making a bold call amid geopolitical worries the man behind that call will join us to explain why first up, in the last hour, at&t has sent a memo to its employees. the company's ceo randall stevenson said hiring the president's attorney michael cohen as a consultant was a big
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mistake. am eamon javers joins us. >> the reputation has been damaged. here's what else he set. this went out to all worldwide employees at at&t. no other way to say it at&t hiring michael cohen as a political consultant was a big mistake. everything we did was done according to the law and entirely legitimate. our past association with cohen was a serious misjudgment. he also says that for the foreseeable future, the external & legislative affairs group, the lobbying group here in washington, d.c., wireport t our general counsel david mcatee, bob quinn will be retiring this comes on a day in which "the washington post" is also reporting new details about this contract saying it amounted to about $600,000 for the president's attorney here's what "the washington post" reported three days after president trump was sworn into office, the telecom giant at&t turned to his
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personal attorney michael cohen for help on a wide portfolio of issues pending before the federal government, including the company's proposed merger with time warner according to documents obtained by "the washington post. so at&t facing enormous number of questions about what exactly it hired michael cohen to do given that he's not a well known s.e.c. or antitrust expert what were they asking for? what was the work product? did he report a pdf, any kind of power point presentation what did he actually do to get that $600,000? a lot more questions here than answers for now. but at&t putting out that statement to employees worldwide. >> i've been trying to figure out how abnormal this situation is because companies pay lobbyists all the time they're paying all sorts of intelligence firms for information on administrations, especially new and unpredictable ones what's so strange here is this is the president's personal attorney who is shopping around
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this pay for play information? >> this is abnormal but it's not a difference -- it's a difference of degree, not necessarily of kind because you do have political consultants in washington who are paid to offer their insights to companies based on their political experience that's not lobbying. that's consulting. it's not disclosed we don't know anything about it but it's presumably an enormous industry in this town. lobbying is when you ask somebody for a favor or set up a specific meeting with somebody on capitol hill or in the administration that's all disclosed we know how much companies are paying for that. two issues with michael cohen. he was simultaneously the president's personal attorney and taking enormous fees from companies like at&t and novartis to enter insights into his own client the big question is whether the president knew about that or not and participated in it in any way or not rudy giuliani had said the president didn't know anything about this so that raises the question of whether it's appropriate for a lawyer to sell insights to
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private clients about his other private clients. the amounts of money here are very high, even by washington standards where these consultants can get paid a lot of money 147 $100,000 in a month is an enormous fee folks tell me that $15,000 to $50,000 a month is sort of the ballpark for these michael cohen was making more than that. largely because companies were so desperate for information about the trump administration when it came in. they didn't know this new team and there were very few who could provide these insights >> what's also somewhat unusual is in particular, the focus which appears to have been on the antitrust implications of the time warner deal for at&t. typically they will employ anti trust experts to give them a read on the law which at&t did and was told you're fine it's unusual for them to go this route to try to get any insight into what the transaction might actually mean or what impact it might -- what opposition it might face >> the other big question is where did this money go?
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this same account, this same consulting firm was being used to pay off stormy daniels, the porn star, who was accusing the president of having a sexual affair with her to keep her quiet. what else did michael cohen do with this money? where did this money flow to we don't have answers to all those questions. >> they didn't get very much for that $600,000 investment >> no, it doesn't appear they did. >> according to randall's memo, they literally got nothing for it at&t's top lobbyist is out we'll watch for that eamon, thanks. let's get to market impact of a lot of policy libby and alex dryden. we're not going to ask you about that, guys, but m&a policy, trade. we're going to hear about cafe emission standards today drug pricing one argument that explains the run-up we've had is that trade has been less of a worry is it less of a worry? >> i think it receded in the
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background while geopolitical issues have taken the forefront. i think we would argue at pimco that trade still remains a real policy risk out of washington. this is not only because we think the president is actually taken literally on his word about his feelings about trade but he can do things unilater unilaterally he doesn't need the congress it polls well. you can see in indiana, he was using this trade rhetoric to sort of fire up the crowd. we think trade is going to be a policy risk in particular with china. >> the headlines on nafta suggest progress, right? this march 17th deadline >> the may 17th deadline is -- speaker ryan came out yesterday saying that was a hard deadline. there's probably a little more flexibility but the point is that time is running short on nafta. there are still really significant issues that need to be worked out, including the rules of content for autos, ip,
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that investor dispute settlement issues so there's still have integral things that need to be sorted out before a pretty short deadline >> are you surprised, alex, that given some of the major risks how the u.s. and china are still far apart, how the time is ticking for nafta? geopolitical future looks uncertain. the market has had such a strong week >> the market has had such a strong week. that's because investors have gone back to the fundamentals that drive equity market in the longer term. we've had a really strong earnings season that's set to continue through 2018. valuations within the equity markets don't look unreasonable and a really good supported global backdrop. yes, some geopolitical risk around the world however, i think investors have got their arms around it they've been able to digest some of the information on things like trade a lot of the headlines sound worse than they actually are as you get some of those details
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you realize actually the ramifications for investors and the wider economy is somewhat limited. and investors are just getting used to that >> can stocks keep rallying, alex, if yields do go higher from these levels? >> yeah, we believe that yields are going to continue to move higher we've seen dramatic changes with inflationary pressure starting to come back in the united states we're also seeing international investors who are being big buyers of u.s. fixed income returning to where they came from as their hedging costs move up now what we're going to likely see is the ten-year grind towards 3.25 to 3.5% by the end of this year for the meantime, we don't think yields will be impinging on equity market performance. but we might start to see that change that's probably a story for 2019 rather than for 2018 >> sounds like something pimco has been saying, right i'm trying to think of tony's view on the ten-year >> we've sort of said 3% is not
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necessarily as significant as everybody has made it out to be. with that said, we don't necessarily think that yields are going to go much higher than where they are now partly because some of these issues, partly because of trade, because of geopolitical issues and the debt overhang and more secular demographic issues as well so i'm more of the skeptical camp than the guest. >> everybody was sort of snickering at carney this week not just because of what he has said in the past what he did this week. now what he's saying might happen later in the year what's the overall thought about europe and specifically uk >> yeah, you know, we actually just came out of our secular forum at pimco i just came back from california last night and talked a lot about europe a lot about the uk europe is, obviously, i think, has seen a little more slower growth so has the uk recently central banks are probably not going to be able to get off the ecb as quickly as they wanted
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to so, yeah, sort of the bullishness about central banks able to be normalized policy at a faster rate. i think that's receding a little bit. >> carl promised not to ask you, but as head of public policy for a place like pimco, you, too, need to figure out what this administration is doing and what the policies are going to look like how do the payments look to you to michael cohen is this something business as usual or totally -- a big black eye for a company like at&t. >> pimco is not -- did not make similar payments but with that said, you have to take yourself back to that time, right early last year when, to your point, the trump administration, he was sort of unknown as what kind of policymaker he was going to be. so i do think especially companies who had a lot at stake were trying to do everything in their power. now, obviously, at&t regrets what they were doing but at that time, i think there was a lot of unknowns, and people were trying to find as much information as
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possible about the trump administration >> sometimes it's call edge. i'm not sure that's how at&t would say it it's what some people sometimes call it. alex, libby, thank you a new note bank of america saying oil prices could rise to $100 a barrel again by next year. joining us is francisco blanch, the author read your note you're taking up your forecast because of what we've seen with the price action of oil. and you say 100 not the base case but is a possibility. what would have to happen to see that kind of level on oil? >> well, we actually have a $90 target for next year the cycle is extended. i think oil is back. we have a combination of factors. venezuelan production has been pulling very quickly down 30% year on year now you're adding iranian sanctions. y is wsee could see a 20% drop
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and strong global growth we've had a good run global economy doing well. the demand running at 1.5 million barrels a day year on year probably the same rate next yeayea year equity markets are doing well. and major shortfalls should be enough to get us to 90 over the next 12 months if venezuela gets worse, if those sanctions get tighter, we could move even higher 100 bucks a barrel and the important point to note is that we're running out of spare capacity even though shale is running fast, guess what u.s. supply went through an asset shock in the last couple of years and people cut their cap ex and their promise to be very efficient on capital usage and reining expenditures we're seeing your classic constrain situation where
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premium prices in west texas are collapsing that's all adding to the problem. >> but on the $100 risk, can you quantify it? are you putting a number on it >> i think it's a medium likelihood we get there. we have $90 a barrel as a target we think we could extend by $10 and the reason we're bullish is because supply is constrained and there's a couple levers that may temper that. we can see saudi arabia increasing production. we could see trump utilizing the strategic petroleum reserve or maybe the russians start to release more oil to the market so we'll have to see those three actions either happening or one of them happening before we get to 100 but it's clear to me when you make this announcement at $75 a barrel, you have to give yourself at least $5 to $10 a barrel higher prices before anything happens so i'm pretty constructive here.
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i think oil is going higher over the next 12 months, and i don't think shale will be able to mitigate the pressures from iran and venezuela. >> but other oil producers could like saudi arabia, which you mentioned. what do you expect to be opec's response to the u.s. pulling out of the iran deal >> so that's a bit of a tricky situation for opec iran is also part of opec. the saudis have to navigate this line very carefully. my sense is they'll make up for some of the missing uranium barrels but not for all of them. and i do think that having read the treasury department note that came after the announcement, it's pretty clear that the u.s. government is going to try to force buyers of iranian oil to bring down their intake and again, there aren't that many places you can go to to get those barrels. and if saudi arabia increases production and this is the additional element, we're going to lose spare capacity spare capacity is running at 2
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million barrels a day right now. we could lose up to a million for ven zalea. another half a million from iran yes, saudi arabia can make some of that up but their spare capacity is going to run thin and that's going to be positive for prices so i think you either go out for one reasoner another reason but the matter is inventories are coming out we'll have to slow down consumption over the course of the next 12, 18 months we're at the end of a very long business cycle and oil demand has been robust and will continue to be until prices get to a point where it isn't. it's the higher number, not $75 brent. >> brent is at $77 this morning. francisco, thank you bank of america/merrill lynch. apple continues to close in on the trillion-dollar market cap. it would be the first company to hit that milestone you might know the price level at which the magic would happen. plus, u.s. consumer strength
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the strongest it's been in 11 years. david burman will join us to explain. dow is up 95 mom, dad, can we talk?
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the trillion-dollar thing gets some strange looks how important is it? but ten in a row will get your attention. >> it's on one of these sprints that apple shares do sometimes go on. if, yes, you asked the question, what gets you the next 7% or 8% to a trillion? it's just continue the momentum. it's a momentum trade. it's also a reassessment for apple. nobody is having a very strong debate about the fundamentals, about exactly how much profits are going to grow. it's how sustainable these massive profits are, and is there, of all things, a shortage of apple stock on a relative basis because you have 5% in the hands of berkshire hathaway pretty much off the board. the company going to buy back, whatever, 10% at current prices this year. and are people somehow underinvested in the biggest stock in the market? that's what it's all about >> also that double dose of optimism from warren buffett that seemed to light a fire under this stock >> it's like the keep it simple approach to apple.
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it's not goabout gauging the supply chain strong and cheap in. the brand is there people love the product. it's not going away. that's your bull case from omaha. >> josh, to the degree we are talking about fundamentals, we continue to discuss this pivot from the razors to the bladeses from the phones to the services. >> yes, so in terms of what you get in terms of where you get that next 7%, i think a couple different ways to look at it near term, a lot of attention is already on the new phones that you'd expect tim cook to unveil in september rbc telling their clients to expect three models, including a new bigger 6.5-inch device how much do you think apple will charge for that device i talked to some analysts who say 1300 some say 1400. but typically, anticipation does stoke this stock here. longer term was interesting.
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i did catch up with gene munster at lew ventures. how he thinks about the stock longer term, the quarters and years ahead. he thinks he's going to see greater sta bill nit the iphone franchise. expecting a flat up to 5%. he thinks that gives investors more visibility and comfort and off that, he's looking for that continued services growth of about 15%. you saw that stronger expected services growth in q2. 31% which took really implied. came from a lot of different places app store. also icloud, apple pay where we see users doubling transactions, tripling in apple music. 40 million subs and counting and as mike was alluding to, capital return munster thinks this is a business that can generate about $50 billion a year in free cash flow and their goal is to get net cash neutral a lot of that going back to
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shareholders >> i'm just looking at the valuation. that's always one of the big sources of debate on wall street when it comes to apple yes, it's come up a little bit still trading at 16 times next year's earnings. microsoft at 26 times. >> you definitely are -- apple is trading more in parity with the market you're losing the apple is blatantly cheap story as the stock has run to where it is on a relative valuation p/e to the s&p, it's at a five-year high also the market is aware of the fact that apple has $110 billion in debt. if you look at it on a total enterprise value, it trades in line with the s&p. it's not super expensive but i do think that's the way the market views it. does it deserve a premium? is it because of the evolving mix toward services, toward a more stable profit base discipline it deserve a premium? the largest company in the world getting a huge premium, you know, it happened. microsoft is at $600 billion
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market cap in 1999 traded at 60 times earnings. i don't think we're going back there with apple that's where the debate lies >> we were talking about boomers and the craving income over time and what that's done for utilities. barron's cover the other day maybe that's sort of in that universe >> apple can be many things to many people. i do think that's a possibility where basically it becomes a little bit of a dividend growth stock. you have the income. it's also buying back. so shareholder return. the question is, you know, once they do get net cash neutral, if they pay back all this accumulated cash, are they going to be earning that much forever or is it just are they overearning right now based on where smartphones are and does something have to replace that really long term >> bigger market value than the economy of turkey and switzerland. >> slice it many ways. >> josh, thank you mike santoli as well an epic board room
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wynn columnist jim stewart spoke with the so-called queen of las vegas. it was a rare interview, and he's going to join us next to tell us what she said. "squawk on the street" will be right back with the dow up 108 your company is constantly evolving.
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shares of wynn resorts at its highest level in nearly fours years following a letter from the board to shareholders restating their intent to remake the company while calling into question the withhold the vote campaign the next guest sat down with a rare interview with the queen of las vegas. joining us, "new york times" columnist jim stewart. >> hi. >> fascinating that she spoke to you. >> yes >> what did you learn about what she wants to do here >> the main thing i would say is don't underestimate her. she's not just another, you know, disgruntled wife, although the company has tried to portray her that she was involved every step of the way in the building of these companies with her husband steve wynn, first founding mirage,
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then wynn resorts, really remaking las vegas into the much more upscale, broad-based entertainment capital that it is today. she's not going off into the sunset she now has 9% of the shares in the company worth about $2 billion. >> biggest shareholder >> her husband head had to sell it all after the harassment scandal. she told me, i'm a grandmother i would rather be like designing hotel rooms, but i'm not walking into the sunset. she could easily do that this is her life work. she said i'm not going to leave it in a tarnished and compromised state. and her point was this was a controlled company by steve wynn because she had to vote her shares along with her husband. these were his hand-picked people running it on the board in key management positions. so he's gone but how much else has changed? all these cronies still sitting around running the company that's true of any company now which is controlled by one person that is abruptly removed.
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even though he's out, the saga that is now unfolding is really fascinating. the remaking of the company. and the stock price has -- is rocketing upwards. because now you have elaine saying we want professional directors and better management and the company put three women directors on they are making changes and moving and they are competing to say we're all for good governance whatever the motive, whoever wins, shareholders are thrilled. >> i don't get her contention, though like so they were cronies of steve wynn's who no longer has anything to do with this company. doesn't own an economic interest what are they going to do that would not be the best interest of shareholders? >> one of the issues, they have a big, big new casino development going up outside of boston the company is now under review by the nevada gaming - >> important hearing on it a week or so ago >> yes as part of that, they're examining who on the board knew?
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did they condone it, cover it up behave appropriately and some people have said oh, let's just sell the massachusetts casino and so we don't have to go through all of that she's fervently opposed to that because she's afraid some of the directors may want to sell it so they don't have to get their own conduct scrutinized. that's just one very concrete example of where conflicts could arise with these legacy directors. >> so we're watching from here the vote rally in support >> i think to the surprise of a lot of people, her one -- what was originally a one-person proxy contest. she now has gotten the support all of three of the major proxy shareholder advisory services who have also said they should withhold the vote for this legacy director. three up for election. two are not legacy directors it's the longer serving friend of steve wynn she's opposing
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>> it's a good piece, as always. jim, thank you and very topical as well jim stewart of the "new york times. let's get to sue herera for a news update. >> good morning, everyone. the head of the world health organization says ebola vaccines will be shipped as quickly as possible to the democratic republic of congo. it comes as the number of suspected cases in the latest outbreak grows >> this is an experimental vaccine. this is not a licensed product, and there are a lot of complications with using experimental vaccine which requires to be kept in the long term at between negative 60 and negative 80 degrees celsius. so this is not a simple, logistical effort. >> the israeli army releasing aerial images it said were iranian sites in syria targeted by the israeli air force on thursday, israel said it attacked nearly all of iran's military infrastructure in syria
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after iranian forces fired rockets at israeli-held territory for the very first time here at home, starbucks has adopted an open bathroom policy following the arrest last month of two african-american men at a store in philadelphia. that sparked protests across the nation chairman howard schultz says he wants to take the bathroom choice out of employees' hands you're up to date. that's the news update i'll send it back downtown to you guys >> thanks, sue now for our etf spotlight. president trump is expected to lay out his plan to try and bring down drug prices this afternoon. bertha coombs is looking at what that could mean for pharmaceutical stocks. >> this morning on squawk box, alex aczar said the president's plan involved 50 different initiatives. it could be to target list prices that may not influence smaller cap biotech as much as larger biopharma players which may be
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why today we're seeing the smaller caps in the idb rallying a little bit of a relief rally that's the most heavily traded biotech etf. azar stressed the administration wants to incent vise pharma to lower their list prices rather than force them. they are looking at limiting price increases on drugs and medicare part b that would link it to inflation. those are drugs administered by physicians like chemo. it would not be as big a problem for blockbuster drugs which prevent age-related blindness. the government paid nearly $2 billion at list prices for that drug alone in 2015 so they couldn't raise it higher but it would put more pressure on firms like legeneron. so in many ways the industry is already anticipating some of these moves, and a lot of them are manageable but the big issue they'll also watch for this afternoon is how the administration will try to accelerate bringing biologics
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and generics to markets and what that will mean for patents carl >> we'll find out a lot more in a few hours. bertha coombs, thank you a state of the u.s. consumer ahead of the big retail earnings david berman will join david to discuss with the dow hanging in firmly to a gain don't go away. anyone can get you ready, holiday inn express gets you the readiest.
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welcome back to "squawk on the street." live at post 9 from the new york stock exchange one hour into the trading session and a rally on our hands. the dow up 0.5%, up 114 points the s&p 500 up 0.3%. and the nasdaq lagging behind today. but overall, capping off a strong week in a strong way if this rally holds through the end of friday. >> next week, retail earnings
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kicking off with macy's walmart, jcpenney my next guest says earnings aren't always the best indication of consumer strength. giving us what have been really good calls >> thank you >> i don't know if you can keep it going >> thanks for having me. >> let's talk about the strength in the consumer. last time you were with us, you hadn't seen such strength in some time. it's gotten stronger >> yeah, it carries on have a look at the numbers we compile the retailers from the bottom up. we summarize them and add in amazon and samsung and apple and we look at those numbers seeing a 4% to 5% growth rate during the obama administration, roughly speaking, the last four or five years. which is actually very strong and consistent pretty good for inflation. and then suddenly we saw a big
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jump last year basically to 6% last year in the second quarter so we were sitting at the end of august, we saw this jump with traditional sales. they were running 1% to 2% they jumped from 1.5% in q1 to 3% in q2 we saw a doubling in the traditional retail sales the total sales went from 4% to 5% up to 6%. so we had a remarkable situation. we were bullish for retail -- >> overall as a result >> because everything, not just retail but everything got lifted >> where are your numbers pointing in terms of overall growth rate for the second half of this year >> well, let's do it sequentially numbers at the end of q2, sales up 6%. in q3, up 7% end of q4 which we just finished, even though it's a
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january year end, it was up 8% up six, up seven, up eight >> is eight sustainable? >> it's remarkable i've never seen numbers like this what makes it more remarkable which is generally speaking good for earnings in the next few weeks. it's particularly started across the board. so when you look at the sales to inventory ratio which is what we do for the last 10, 15, 20 years, you have a remarkable spread where traditional sales are up about 3.94% the images are only up 2%. >> which is good that's what you want >> that's what you want. not only about 8% in total, but it's 8% what's good margins and not like discount prices >> let's come back to the bigger -- big theme. 4 1/2 years ago you were on and you introduced this ssa concept and said sales will be okay. so much of it is going to
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samsung, apple, amazon so much of it is going online or people using their phone the environment you're describing is one in which the old retailers have been benefiting >> a lot of investors are being -- becoming optimistic and thinking you've got a new world where there's an equilibrium where retail an survive with the amazons of the world i don't think that's the case. what happened, sales jumped up for everybody. >> they are benefitting from this overall surge in consumer spending but the trend itself on not changed. >> correct that quarter we had was 2013 we call it a new paradigm because of -- mainly because the smartphones and also the ipad had just come out. at that point, the s&p for retail has completely underperformed started performing really well the last year but we think it's going to getbetter again because we can't see how amazon
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is just going to carry on hurting everybody else >> okay. so longer term, it's the trend remains the same traditional retail still under pressure but near term they seem to be doing okay we talk about macy's many times. are you positive on macy's >> i'm not positive on macy's. i think they're in a tough space. the stock up about 50% since we were with you six months ago and they are closing stores. but they're in a very tough space. they're not doing so well. their sales should be okay this quarter and next week. the economy is robust. next week should be okay but longer term, i'm not a bull on that name >> is there any brick and mortar retailer, even though they have omni channel, that you are positive on or despite the fact that they're benefiting from this overall incredible rise in consumer spending, are they still long-term not something you -- >> the problem is that the good
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names and the ones that are not so affected by the internet like home depot, they -- it's really reflecting the stock prices. huge p/es. even tjmaxx having a tough time recently they seem to be doing well because they're not affected by the internet another would be five below. they keep opening less amount of stores and they are just great stores for the mall. brands and names doing well and should continue to do well but it's not so easy out there for retailers. >> and to your point, many stocks have moved up as a result of the strength in the same-store sales with this incredible 7% or 8% rise overall, can that be sustained? we've got tax cuts now that would seem to be putting more money in people's pockets, or do we smomehow run out of steam? >> one of the things i wouldn't believe like last year, august, september, was the long bond was
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2.15%. and the ten-year yield this doesn't make any sense. one of the strongest economies i've almost ever seen when you factor in inventories as well. and 2.15 now 3.15 at this point, who knows if inflation is going to come the best is it carries up, goes to 9 and you don't have inflation. that's the best scenario it's hard to see what's going to happen with -- these numbers of 8% are without the tax cuts. they are without the government. so to add in tax cuts and government spending, can the economy, can it absorb it without having inflation that's what they're started to wrestle with something we've been seeing for six, nine months >> but retail may be safe for the near term. >> make no mistake about it. that's the nature of it, what amazon and this new world is doing.
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some stocks down 20, sometimes up 20. it's actually very exciting times for retail stocks up 50 to 100% the last six, nine months >> david, thanks david berman for durban capital. take a look at shares of dropbox reporting better than expected numbers in revenue. its first result since going public in march. stocks down almost 4%. adding new subs. more than expected, also expectexpect ed it took guts to start my business. but as it grew bigger and bigger, it took a whole lot more. that's why i switched to the spark cash card from capital one. with it, i earn unlimited 2% cash back on everything i buy. everything. and that 2% cash back adds up to thousands of dollars each year... so i can keep growing my business in big leaps!
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bienvenido a casa, papá. pnc. make today the day. why is one technician calling exxonmobil the ultimate catch-up trade find out tradingnation.cnbc.com n'goway. more "squawk on the street" right after this
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dow up 100 points. let's get over to the cme group. sick santelli with the santelli
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exchange happy friday, rick >> ides li'd like to welcome dr shelton sworn in as the executive director of the european bank reconstruction and development. insofar as this administration, dr. judy, they always seem to find an upper hand using some leverage when they negotiate whether it was with china, to try to accomplish what they are working on with north korea by using trade. in this instance i'm referring to, we have nafta negotiations one of the issues, a certain percentage of workers need to make a minimum pawage of $16 whether it's in the final agreement whenever that is done. i think it's an interesting approach your thoughts? >> well, i think that the united states is wise to use trade negotiations to use our leverage for most of our trade partners their relationship with us is one of the most important
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aspects of their own economic performance so we definitely do have that leverage and i think our overall approach of demanding that trade be free, fair and reciprocal works to our advantage in all of these negotiations negotiations i used to teach a graduate business course in monterey, mexico i think that our relationship with mexico needs to be very productive and very successful for their sake and for our sake because we, both of us, have a lot to gain, both countries. i hope that we can work something out on nafta my concern with whatever our final decisions turn out to be with regard to improving it, if possible, and making it a good trade agreement for american workers as well as for mexico, my concern is that they still have the right to let the peso weaken and it's not just a matter of letting it it happens markets do it.
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we've seen a terrible depreciation of the peso relative to the value. so we would aye would hate to see it undermine the value of our relative currencies. >> i couldn't agree with you more we've talked about this. no matter what negotiations involving trade end up as, playing games with one currency could negate much of what that accomplishes do you see in our last 30 second s, that's all the time we have left -- a way to stem that type of use of one's currency >> i think we need to start seriously thinking about side agreements and taking account of the impact of currency depreciation against the terms of trade what's the purpose of going through all that and fine tuning your final negotiating result
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and then you're not able to really carry out the effect because the change in the relative currency changes the prices of the goods that are imported and exported? >> excellent dr. judy, always interesting congratulations on your new role in this administration david faber, back to you. >> thank you, rick. let's send it over to jon fortt for a look at what's coming up on "squawk alley." jon? >> we've had a lot of cloud news this week. we're not stopping even though it's friday. over at ibm he is up against it with amazon, microsoft, google how is ibm going to keep growing revenue and step it up a notch with the cloud we'll see if wcan e find out, coming up on "squawk alley." and while we make more e-commerce deliveries to homes than anyone else in the country, we never forget... that your business is our business the united states postal service.
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and production timetables. spacex has rescheduled the launch for later this afternoon as musk continues to boost expectations for his ambitions at both companies. we saw that loop video we saw the uber drone helipads and the robots i tweet this had morning the future is coming fast. >> it's coming fast. i know we're on the same side here we're very concerned i know i am, but it's a way out, as is musk, by the way, extremely concerned about the growth of ai and what it will mean, overall for the growth of our civilization. >> i thought you were going to mention the tesla news events or the elon musk -- his head is all over the place haerk ahead of the falcon 9 launch, earlier with the met gala with his new girlfriend, and i think this is one of the things that investors wonder about he has to have his head focused
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on model three production and that's what's driving the stock. interestingly the stock was back where it was before that disastrous conference call. >> it's more about the long/short battle than any fundamental analysis of their cash flow. we'll see. betting big on the cloud, ibm senior vp david kenny will join us on "squawk alley." ys, aging power grids, ...aging everything. we also have the age-old problem of bias in the workplace. really... never heard of it. the question is... who's going to fix all of this? an actor? probably not. but you know who can solve it? business. because solving big problems is what business does best. so let's take on the wage gap, the opportunity gap, the achievement gap. whatever the problem, business can help. and i know who can help them do it. pthey don't invest inn stalternativesds. or municipal strategies. what people really invest in is what they hope to get out of life.
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good morning it's 8:00 a.m. at facebook headquarters in menlo, california it's 11:00 a.m. on wall street "squawk alley" is live ♪ good friday morning. i'm carl quintanilla along with morgan brenen and jon fortt. apple is inching ever closer to becoming the first company t

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