tv Squawk Alley CNBC June 27, 2018 11:00am-12:00pm EDT
wall street and "squawk alley" is live. ♪ ♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with jon fortt. morgan brennan is with us from a harley-davidson plant in kansas city a lot more from morgan later this hour. first up, though, this morning the trump white house announcing a pivot in its approach to restricting chinese investments in the united states our kayla tausche is in washington with all the details. hey, kayla. >> hey, carl the administration decided to forgo investment restrictions targeted specifically at c,
which the president directed treasury to study in march but instead it will lean on an expansion of treasuries existing authority to review foreign transactions that may pose a national security risk there is bipartisan legislation moving to do just that and a version passed the house yesterday 400-2. the decision removes a tool the president and hardline advisors sought out in dealing with china and the treasure secretary argued on cnbc that unlike investment restrictions which would have taken time to craft and implement this approach creates more clarity. >> this doesn't create more uncertainty. again, we will publish regulations, we will provide clarity. we're clear that the united states is open for business and we'll be c on what type of business we're going to look at carefully and what type we're not. i think everybody understand what the critical technologies are and this does provide clarity. >> what is unclear is what
happens now. this move represents the softer approach the treasury secretary had been seeking behind the scenes, but it comes just a week before the effective date for a potential set of tariffs on $34 billion in chinese imports no talks have been advertised but secretary mnuchin says if china is willing to discuss free and fair trade their phone lines are open jon? >> thank you, kayla. let's bring in our steve liesman now for his take on this steve, i guess ia way, maybe we don't know exactly what these expanded cfius powers will mean until they exercise them and say no or hold on to something, but what can we gather might be different? >> couple things it's a review process by a committee. that's different from say it being up to the prerogative of the president. treasure secretary mnuchin also told us that it will prohibit or could prohibit the transfers of technology through joint ventures as you know sometimes companies, they may get turned down through
the cfius process but create a joint venture on the other side and that be prohibited through this process i think there's some -- what's the right word or way to put this -- some happiness out there in the market that navarro and light houser are not entirely driving the trade train on their own, tha being runy also mnuchin and hassett and kudlow, seems to be having -- cooler heads are prevailing on this take a look at chinese foreign direct investment in the united states over the past several years. you can see it absolutely plummeted over the past several years right there. the first half of 2018, down some 90% this is the u.s. dollar amount and then you look again at the number of transactions and that's come down as well look, chinese buy u.s. bonds, they hold u.s. dollars, in part because they feel like they have a claim on u.s. assets if we were to reduce that amount
or make that conversion more difficult it would be less value to the assets. u.s. firms may face similar on the other side there is a cost to what we call protection >> interesting the journal does a piece loong at options china has one, they argue is simply taking a seat in silicon valley and starting to hire entrepreneurs and engineers at scale. >> you know, the other thing, carl, is there is a great tide that is running right now which is the speed of transfer of technology i was at a seminar not too long ago and saw the time it took for the steam engine or the electric motor to move around the world and compare that with the speed of which an app moves around the world and different ways to do that, both -- theft i think is the smallest piece of it i think just the market incentive is the biggest piece of it. then you had an interesting interview with larry summers this morning who said look, the
chinese are doing this through basic education, basic funding of sciences and the u.s. has pulled back in those areas the u.s. remains the leader, but china is catching up fast on these things in terms of growing their own when it comes to their own technology >> steve, as you know,the past r it's been hp, intel, qualcomm, very often when these big u.s. tech companies want to move into china, sort of as a condition, china tends to demand some sort of joint venture or multimillion-dollar sometimes $100 million or more inves >> right. >> in chinese start-ups and their ecosystem. some of these companies, intel and qualcomm in particular, probably have technology that falls into this arena of strategic importance that cfius is going to look at. are we going to end up with china saying if you want access to our market we need you to do this and have a joint venture and cfius may say you that , you know this better than i do, but managing the
differential between --i forge the number -- 1.5 billion chinese and 300 million otherwise very wealthy americe of the biggest stories of our day the idea that the u.s. per cap pita, u.s. gdp is a share of the world has come down from call it 25 to around 20, china has come up they're getting wealthier and can make that demand of companies. if we want to play over there -- by the way, jon, it's a way that ompanies more often do business, is by setting up shop over there, rather than exporting from the u.s.'s. if you look at u.s. foreign affiliate sales, there are many times what u.s. exports are because what a company typically does, it goes over there, more efficient to do that way maybe now with the tax regime, some of that is more equalized it's going to be a situation where american companies go over there and they build over there and you're right, they have to sometimes take it -- go under the local laws that make them provide some of that technology and it's going to be a -- you're
going to miss out if you don't do it or do it and transfer that technology in that regard. >> finally, steve, in terms of retribution actions that the chinese could do, people talk about holding up m&a, they talk about adding inspections to various sectors over there, ing certain u.s. products. do economists take that seriously? >> absolutely they do. the whole retaliation thing is why makes this bad because any number the trump administration comes up with, what you kind of double that look at what harley-davidson is doing. they're doing this not in the first stages because of tariffs from the trump administration, these are the reliations by the trump administration so that is absolutely key, the total amount that is put on in terms of tariffs and i will say this, carl, ere's good news in this announcement this morning. it tells to me that cooler heads are prevailing you might do something like this if what you wanted to do was set a better stage for talking with the chinese.
that's been the regime of the past two administrations, was to elevate the importance of the total relationship with china and i think it's ultimately yielded excellent economic results for both countries the president chooses to emphasize the negative of which there are so, but i think that guys like mnuchin want to sit down with the chinese and they really want to make a deal >> well, the pressure is on. we'll see if it leads to a break through. steve liesman, thanks. meantime the president takes aim at harley as the company announces they will move in production out of the united states morgan brennan is with us from kansas city at a harley factory that is, in fact, getting ready to close its doors hey, morgan. >> hey, carl that's right like it or not harley-davidson has become a lightening rod for this bigger glob debate after you mened an announcement this week to shift some production overseas tied to the eu tariffs after it drew the ire of president trump. the stock down about 6% this week, on all these headlines and
just this morning, treasury secretary mnuchin did comment on this iconic american brand >> i wasn't happy about the announcement, so, you know, i would just say, every single one of these meetings i've been part of, i listened to the president talk about tariffs on motorcycles and he's been a big advocate of harley-davidson and american products so i don't know why harley-davidson would come out now and say they're moving production. we've been fighting to lower their tariffs all over the world. >> now there are three ways that trade policies have been impach has been expanding internationally to try and offset what has been plunging sales here in u.s first you got those eu tariffs which jumped from 6 to 31%, meaning motorcycles bound for europe, which is harley's second biggest market, that are made here in the u.s., are now increased costs at $2200 harley's notng tise
prices it ishifting pduction of those motorcycles specifically overseas secondly, harley has said that it's feeling the impact of higher aluminum and steel prices, that is tied to the tariffs on those materials, and that will impact the company's cost by an increase of 15 to $20 million this year. and lastly you have the decision to open a ne thailand, even as this factory in kansas gets ready to close next year. the company disputes the lin between those two scenarios but a number of employees, trade reps and president trump made the link t that facility in thailand, direct result of trade policy, it was announced the company announced plans to move forward with that after the u.s. pulled out of tpp last year because in thailand, that country imposes tariffs up to 60% on imported motorcycles when talking about harley-davidsot has to be in asia it is one of its fastest growing
markets. put all this together you have examples how far trade globally is to use president trump's own words, quote, unfair and unbalanced but in the case ofley, as this playsut with this company specifically, it is a stark example of how perhaps the policies that are being implemented to address this issue, are actually making it worse, at least for now. guys, i'll just leave it at this, adding to the bad news, s&p also putting harley's credit rating on credit watch this morning. and it cited increased risks due to, what else, tariffs and declining sales. back over to you >> morgan, here's the part that i don't get, so i think everybody would agree, toyota is an iconic japanese brand, but we expect -- the trump administration expects they're going to continue torate their plant in kentucky, so how does it work that we expect that a company from based overseas that sells automobiles here will
have manufacturing here, but we expect, harley, an iconic american brand, to what make everything here? how does that make sense >> i think you're getting at the very heart of the point that a number of analysts and investors have made where this company is concerned. phil lebeau has reported on this week as well when you look at manufacturing it is a global scenario, right so whether it's the automakers as you mentioned, whether it's industrial com glom rates like ge, over the years they have been expanding and broadening and diversifying their manufacturing base, in part because of trade policies in other countries and also transportation, a lot of other factors that go into where manufacturing is taking place. harley has been slower to do that because it has been an iconic american brand and its chief market has been the u.s., still the case, but it has this longer term goal now as sales slump here and baby boomers age, to sell more of its bikes internationally and there are a number of economics that play
going to do that in manufacturing all these policies don't help encourage more manufacturing stateside. >> b story, morgan, we're glad you're there for it. we will take a short break after a tough start to the week, tech stocks starting to stage a comeback, but could tech be a target with the new announcements on chinese investments. dow is up 172 as kudlow is on the tape saying the white house is not retreating on china more "squawk alley" continues in a minute oh, and there's the closing bell.
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tech stocks slowly turning around after a rough start to the week on those fears of a trade war with china the question is which tech companies are most exposed to the risk going forward gene munster, founding managing partner of luke ventures with us at post nine good to see you. welcome back. >> good to see you. >> looking at shares of various names of alibaba, for instance, down to a two-month low here how do we filter out whi ones are exposed to crossfire >> the ones that have trade risks like tariffs, obviously something like tesla and the ford company and automotive has an impact, but we don't think that's going to be a material impact i think the bigger picture here is that the stocks have had a huge run and aggregate of 23% over the last three months look at the nasdaq up only 9%. when we think about the trade versus the trade wars and tariffs versus the actual stock trades, i think that you could see some of them take a pull back here, in particular things
like netflix and amazon have had some big runs. but i think there are also some unique opportunities within the large cap tech, particularly around tesla and apple. >> why around tesla and apple in particular i know you have a close eye on possible tesla deliveries in. >> from tesla's perspective the key metric this quarter around the production of model 3. that's no mystery. we decided to take on a daunting task and give credit to amir wallace from our team who spent three days outside the tesla factory and started to deconstruct how model 3 production goes. the tent in the back of the factory that i think a lot of tesla observers watch to see what production of model 3 is. in fact, that's not a good indicator to try to figure out production so give credit for triangulating everything legally, staying on public property here, we're able to find some insights around how they ship the model 3s out of
the factory. i want to give you a quick insight around that. there are three shifts a day in the factory. the second shift is basically preparing, part oft shift isle and about 7:00 at night we observe this massive outflow of trucks because of traffic reasons, and so we're able to get a glimpse in terms of the amount of outflow and then we know there are six cars per, but jon, to answer your question, what this yields is we think that tesla will produce somewhere between 43 and 4900 model 3s in the final week of the quarter. now, elon musk has been out saying it's going to be 5,000. this is a little bit of a miss i don't think that changes the story here, which is a massive improvement, basically a doubling of model 3 production quarter on quarter and i would view that as a positive for the story. >> you think the market will give him credit for that >> absolutely. because i think that the market still has some suspicions about
their ability even though elon musk's emphatic reiteration that they will get there, i think people believe that they're probably not going to hit that i know that morgan stanley is out saying they're going to miss the number we feel that story is intact and i think that back to the point about tech stockbroadly, i think that if they do start to deliver around that production ramp, i think that is going to yield some upside to tesla's stock. >> is our eye off the ball, perhaps, tech stock wise i have been watching oracle after quarter and concerns about cloud growth, similarly red hat had been growing fantastically, but there were concerns about their latest numbers and some of the enterprise software stocks seemed to take a little bit of a hit maybe after those two sets of results, is there something happening perhaps in the cloud space in the subscription space that's going to warrant a closer look even than tariff impact >> yeah. i think so i think those stories in
particular, since they've had such hyper growth we're starting to reach a point of more normalized growth, 20% growth, and once you start to ease that growth trajectory, that has a negative impact on the multiple. those stocks in particular, that group, i can see a little bit more of a headwind to it cious in terf thinkingto bvery which stories have some measurable catalysts over the next few years and another one we've been more close to is apple and i think some of the things around what they're doing with the iphone growth and separately the cash piece. it's been well documented, but i think that's another opportunity for upside in the next few months. >> netflix at the top today, b of a take the target to 460, talking 360 million subs by 2030 i don't know how you model that, but let's take it for what it is >> let me take a step back and as a -- somebody who worked for a long time on the cell side a
little bit of the workings of how these price targets get in up, essen i someone is generally positive, exceeds the price target the compliance department will reach out, downgrade the stock or you got to move it a little bit higher you see the game of people inching their price targets up i don't see that as a particularly change in theirconl i think it more or less them just kind of staying with the story and so we're -- what is most notable for me is when an analyst really takes a jump forward and really sticks their neck out and i don't see that in this case with the recent revisions around netflix. >> when you look at apple in the second half of the year, usually around late july, early august, we start getting the crazy rumors around the iphone that eventually start taking the stock this way or that what is the fundamental thing of importance do you think to watch this cycle with apple? do the phone features matter much at all? is it mostly the services stuff? what should investors have their eye on >> the biggest piece is we're
entering a new paradigm around apple. more broadly think about apple as a service, not just a services segment, but the hardware as a service. i think this piece that's going to change the trajectory of apple stock, investors getting progressively more comfort that this is an iphone business 0 to 5% grower. this anxiety that we currently have every quarter about wha uction numbersink we're going to slowly move away from that of the base of 800, call it million active iphones and just a natural upgrade period, i think that is going to be the biggest takeaway as we look back in a few months, i think that this idea and just to put some numbers around that over the last six quarters, the iphone has been down 3% to up 5% we actuallhave entered a period of stability. i think that's the key even more important than services >> reporters who check in supplo find a new game. if it's not going to pivot around the cycle what's going to
move shares of service revenue projections? >> the services has a big impact but there's some untapped opportunities. look at the content piece. interestingly the number of unique or original content that apple has was simir what netflix had five years ago imagine them manage a content business as netflix, that's a reasonable assumption and we have ar opportunity and dare i say a new category around auto could well. >> we've been waiting. we'll see where that goes. it's good to have you on set. >> thank you >> thanks, gene munster. and coming up, the trump treasury department announcing a new way to restrict foreign investments in the u.s but whs that mean for big tech companies we will dig nt. quk le wl be right back making wine in 1948... [sfx: bottle sounds on conveyor] one bottle at a time. today, we produce nearly 20 million cases a year. chubb has helped us grow for the past 30 years...
seema moody back at hq with that >> here's a setup in europe today. european markets are rebounding to finish potentially on a positive note after president trump appeared to soften his stance on trade with china following weeks of heightened rhetoric see the german dax up 0.8% let's take a look at currencies. the euro is falling by as much as half a percent against the u.s. dollar as the u.s. dollar rallies to a multimonth high 115 for the euro european stocks worth pointing out down around 2.5% here in 2018 that's the yearly performance. really led by the banks which is the worst performing sector in europe as european rates are forecasted to stay lower for a longer period of time. the banking index down about 24% since february it's really led by deutsche bank which hit an all-time low today. back to trade, just worth noting interesting analysis from the alliance of automobile manufactures which represents a
number of foreign automakers said buyers of imported vehicles would face a nearly $6,000 price rise on this 25% tariff that has been proposed and an indication of how consumers will be potentially impacted volkswagon is up 2% today. carl, sending it back to you. >> thank you very much. when we come back a lot more from morgan brennan live at a harley-davidson plant. morgan >> hey, carl that's right there is a lot more in terms of president trump versus harley-davidson and this great trade debate we got a tweet from president trump a few moments ago. more harley-davidson should stay 100% in america. with the people that got you your success i've done so much for you and then this. other companies are coming back when they -- where they belong we won't forget and neither will your customers or your now very happy competitors. we will have more on that. an interview wita key rmfoer executive of harley-davidson
good morning once again. i'm sue herera your cnbc news update at this hour on a two-day visit to india u.s. ambassador to the u.n. nikki haley says the primary focus of her visit is to strengthen ties between new delhi and washington she made the comment after visiting an indian historic heritage site. >> once again solidify our love for india, our belief in the
friendship that india and the u.s. have together, but our willingness to want to make that relationship even stronger in this day and time we see more and more reasons for india and the u.s. to come together. an east pittsburgh police officer who fatally shot an unarmed black teen has now been charged with criminal homicide michael rossfeld was arraigned this morning after turning himself in he has been released on a $250,000 bond. he's accused of shooting 17-year-old antoine rose three times during a traffic stop on june 19th. florida's agriculture commissioner says a controlled burn by state contractors sparked a wells fargo that destroyed -- wildfire that burned more than 800 acres on sunday as a result officials have suspended the practice statewide. you're up to date. that's the news update this hour back downtown to "squawk alley." jon, send it back to you >> all right thank you, sue. and meanwhile, an iconic
american brand under pressure from president trump harley-davidson, shifting some production overseas amid tariffs concerns, prompting the president to say they would be taxed like never before. just moments ago the president tweeted, quote, harley-davidson should stay 100% in america with the people that got you your success. i've done so much for you and then this. other companies are coming back where they belong. we won't forget and neither will your customers or your now very happy competitors. joining us on the phone former harley-davidson senior executive, clyde fesher, ar of harley-davidson became king of the road." thanks for joining us. >> good morning. >> good morning. i want to know how big of a quagmire is harley-davidson in right now in this pressure from president trump? it seems that the trump base is very much, at least the u.s. target market for harley, am i
wrong? >> in order to answer that question, you have to look at harley in perspective. it's been around for 115 years and for the majority of that time we were a domestic company shipping units to canada, the united states and mexico in the 1980s we had a turnaround and started exporting motorcycles and at that time, we had about 4,000 units being shipped to europe. well, now things have changed. again, and harley is becoming an international, global company. and by that, that means having manufacturing facilities throughout the world where there's market for them. just like tie ooyota, honda, mercedes and bmw they've done the same thing the quagmire we're in should be in perspective and remember one thing, the heart soul of harley-davidson is its z twin engine potato, potato those are made by skilled
employees in milwaukee, wisconsin. so, i'm not -- i don't represent harley and have been retired for 15 years, but my station is that they will be shipping engines o world and having assembly knock down units in various spots in order to satisfy those marketplaces >> so when clyde, when the president says that 100% of harley should be assembled in the united states, when was the last time that actually happened, 100% >> i think back in the early 1990s before we opened up brazil and harley also -- i've heard has a facility some place in thailand, but those units are built for those markets and stay there. they don't come to the u.s >> clyde, this is morgan brennan. >> go ahead. >> i'm actually standing in front of a facility here in
kansas city to report out this story as it's playing out this week we're really happy to have you on the phone for an interview. when president trump tweets about harley-davidson in this manner and tweets really sort of at the customers, american customers of harley-davidson, i realize that there is this diversification strategy under way for the company and international sales are becoming a bigger and bigger piece of the mix. but the u.s. is still the biggest market, you still have this core rider demographic, which in many ways overlaps with the trump base how much could that impact sales here in the u.s. >> well, that -- we'll have to estimate that some time in the future i don't think from my belief it's going to impact anything in the united states as far as it's concerned. >> clyde -- >> but -- >> tell me culturally, culturally, to follow up on that, how much of that harley mystique that's so important to the brand itself, though, is rooted here? if there seems to be some sort
of conflict inside the u.s. or a stirring up of the u.s. base against the harley brand, does that affect how harley is viewed internationally? >> it could, but if you understand the brand statement of harley and what harley is, it's very simple, you know, harley-davidson creates and provides a motorcycle lifestyle for motor enthusiasts who witness their products and services to be symbols of strength, freedom, individuality, americana and want to share and participate in the harley-davidson heritage, tradition and mystique that is a global brand and that's going to appeal to people all over the world, including the united states. >> clyde, i want to read a sentence for you from webb bush from analysts who said much like the great recession gave the company cover to renegotiate labor contracts in 2009 the trump tariffs to some degree
give the company cover to shift production to lower cost labor markets. this seems to be a hot button in terms of this debate between employees and union represens, particularly in kansas city and the company itself is there truth to that >> everybody's opinion and everybody has a different one when it comes to that issue. i don't have an opinion on that. >> and so, clyde, what do you think is the smartest path forward messaging wise for a company like harley that is in this position, not only with customers, both in the u.s. and abroad, but also with workers who might not understand all of the economics behind this. they're an important part of the equation what does harley need to say now? >> harley needs to pay attention to its core competencies and its
core customers and satisfy their needs in the marketplace and that's a variety of different things depending upon the situation you're in or they are in >> all right clyde fessler, author of the book "rebuilding the brand, how harley-davidson became king of the road." thank you. it's not the end of this story, i'm sure. >> you're weome. >> developing news on an ongoing story according to multiple reports today the doj is expected to approve disney/fox as early as today. we will be looking for more clarity on that out of the doj if, in fact, that does happen. meanwhile, we got a selling off a bit going into the european close. we'll get a lot more ahead on the trade impact to the markets. rick santelli, what are you watching today >> divergence. global divergence. it is a big deal and part of the tre issues may affect it moving forward, but it's already we aotllfo and that's what we're going to talk about after the break. es that you don't think about very much.
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break news on a developing story, multiple reports today indicate the doj is expected to approve disney/fox as early as today. it comes on the heels of an earlier report by the journal this morning that comcast is exploring its own tie ups with other companies, potentially some private equity investors that could provide additional cash if, in fact, they pursue that acquisition of 21st century fox assets that's according to people familiar with the situation. but a lot of moving pieces on this front. >> that explains how comcast still manages to be down, despite the news that the tie up is going to happen perhaps without comcast involved. >>right. fox, obviously the big winner, not quite all-time highs, but 4856 will get your attention as well dow up 128 let's get to rick santelli and the santelli exchange. rick >> good morning, carl. you know, investors making a profit is pretty high a
priority politics is important to everybody. we can tell because everything is so political. but investors seem to always find that magic place where they can be cognizant of what's going on in politics and even have veg opinions but when it comes to their investments, they need to kind of clip away all of the peripheral issues and concentrate on the reality they can touch, not the possibilities they can't i think trade figures prominently in that. before we can get into that discussion let's look at the facts that we do know. the ecb has some statistics i find interesting if you look at goods and services with respect to its relationship to gdp, the eurozone, about 27% of their gdp is goods and services. if you look at china it's about 21% goods and services you look at the u.s., it's about 12% with respect to the interdependency issues so, obviously, we have a higher
tolerance for pain just look at the generics we've been saying on cnbc for days shanghai composite i believe the latest update is down about 16% year to date the stock is 600 down 5%. then you look at the s&p up 2% the dow down a bit nasdaq, the bright spot up a little less than 10% these are the real facts you can take it to another level. gdp nois evidenced by atlanta and we're closing out the quarter. move from 4.7 to 4.5 many analysts aren't that high but they're somewhere in the high 3s, low 4s. contrast that with the numbers in europe, numbers in china. look at the realty of what's going on in foreign exchange i can't tell you that it's an inherent strategy for the chinese central bank to be letting their currency weaken against the dollar, but there's a lot of reasons why let's face it, first of all, it is fixed so part of that is intentional, but part of it is also to combat the bigger slide as they have to deal with buying
dollars to, of course, try to amealate what's going on there, and all of this, all of this, ultimately shows that the chinese and the europeans aren't on the upward trajectory of the u.s. so no matter what happens on trade, investors are very rationale and cognizant of that. can the trade deal go bad? certainly. when a couple fights it might start out as a separation and could easily end up in a divorce. i think that the real issue is, to avoid other than negotiations, micro management i don't want this administration to look at every deal. there has to be a transparent stencil. hopefully all of that now moving to cfius big news today is really a part of a negotiation and never would be a micro management plan. that would be horrible for the economy. carl, back to you. >> all right rick, thank you. a lot to watch today rick santelli at the cme watching the markets here, we got a bit of a sell off the highs of the session as we went into year's close.
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survey >> as far as americans go, it's facebook free or bust. even when it comes to protecting their owy. let's lookt what kind of numbers we're talking about before we get to the answer here how often do you check facebook, we asked 800 americans around the country of all stripes, income groups, and ages. 47% say every day. 21% say less than once a day, and 32% say never. more on that at the end. but do you support regulating facebook, the government regulating data privacy on facebook you can see whether you use facebook or not, more than half americans want the government to regulate privacy or sharin data on facebook, and just about a third do not now, to the question here, let's look at the critical issue of whether americans will pay to protect their privacy on facebook the answer, not even a dollar. all adults, 10% willing to pay facebook users, 15%. not willing to pay, 55% of all adults 82% of facebook users will not
pay, and we offered even a number as low as a dollar. they still said no believe it or not. one more stat, just 2% of americans soarhey once used facebook but stopped because of privacy concerns. carl, would you pay a buck to prott your privacy on facebook a dollar that's all i need. >> i don't think so. i don't think so >> carl protects his privacy by not using facebook >> it's true >> he's a 32 percenter >> fascinating look at it. wek about it anecdally all the time it's nice to have numbers to put with it. thanks steve liesman. >> meanwhile, jeff bezos spotted in the jung 8, as seen by our producer, michael sheets billionaire founder of amazosee cambodia, seen biking near a temple >> wearing a helmet. >> he takes some killer vacations. >> he does >> dog sledding in the frozen north. >> i think that's good
i mean, they say work hard, play hard but also, when ceos are actually seen taking vacation, i think that's good for employees. now, do amazon employees get to take vacation inthat's another question >> continue to watch shares of media, obviously, dow jones reporting that the department of justice is expected to approve disn proposed $71 billion acquisition of 21st century fox. as soon as today this is according to a people familiar with the matter they argue it gives disney a leg up in its battle with comcast for control ankey pieces of that empire. really, an assemblage of media assets that murdoch has spent decades putting together, and very hard to replicate >> now, comcast shares are marginally, fractionally higher on this. though there is some expectation that comcast might need to counter in some way, spend money 1 way or another, whether they end up with fox or something else, such an interesting time
in media where there are -- all of these moments of competition for premium assets and our david faber is here on set now to maybe provide some insight. >> a little re of course, we were talking about earlier that there was a of murmuring about this we can also confirm, in fact, the doj will approve disney's acquisition of the fox assets. they are going to be expected to divest all of the regional sports networks. that being disney. that's 22 of them, and a significant contributor, by the way, of the cash fw to the overall company. disney has said in its merger agreement, it would be willing to divest all the rsns, and my understanding is at least based on sources close to the doj, that is going to be an expectation or commitment to gee approval but stepping back for a moment, just looking at how quickly this approval has come through. it's very rare that i can remember a deal of this size and complexity getting approval roughly six months from
announcement by the doj. the way, they still own will need approval in other markets around the world, including china, but this will put pressure on comcast from a timing perspective, no doubt i think there was also an expectation in the comcast camp that they have an approvable deal here. as i reported earlier, even with this likelihood occurring very, very soon, comcast is still planning on countering noarily this but you have to wonder in terms of timing, what the value differences can be given how quickly conceivably disney will be able to close this deal once it receives approval from other jurisdictions around the world >> then what do we make of this reporting if a more aggressive deal is forthcoming, it will be with the help of other parties on the comcast front >> it's certainly a possibility,
carl i think something that comcast will also most likely need to do is divest those rsns and that is, by the way, you coul presell them in a sense, andherefore, you are g capital already. now, you may be paying a higher multiple ithe deal that you're using to require fox then you get for the rsns themselves in a secondary deal, but it's another way to potentially raise capital. also, the possibility of including stock. remember, the disney deal is, of course, half cash, half stock. right now, $38 a share roughly it's not inconceivable that comcast would choose to top off with some stock. its deal is all cash yeah, i can't rule out the possibility if you geto a certain level, their debt capacity gets to an extent where they would want to potentially partner. that seems a little unlikely to me in some ways. >> does the speed of this expected doj approval underscore that we are in a new era post f
post-at&t/time warner. there was a what objective can they have after they lost that case. >> although they're planning on potentially appealing that case. certainly, that was what opened the door to the comcast bid, the feeling that would give them a significant way to pursue it, and both sides committing to significant divestitures in the face of that, and according to oureporterey are going to ne to be divested by disney. but, you know, that did pave the way for it, jon. it doesn't necessarily mean you can draw a conclusion as to how a justice would have approached this or the comcast deal specifically given the differences in terms of the distribution footprint of comcast, in particular their dominant, but their regional player, but dominance in terms of providing broadband in certain regions of the country on the comcast front, would it also mean them potentially
ha to divest hulu? don't know the answer, but e.at's anothsibility we'll see where this goes. but you know, i think people are going to step back and also just wonder given the speed of this approval, how it happened so quickly. and whether it -- because we have come to expect that everything takes forever >> sure. >> not the other w around. look what time warner ran into 18 months, obviously, it included a court case, but man, six months, beginning to end, that's pretty quick. >> on the last, the announcement at comcast most recent bid, jim made the point we were closer to the end of the process than the beginning. does it feel that way to you >> yeah, listen,'t have a new shareholder vote date yet, and that's a key again, don't expect comcast necessarily to come back this week, but still expect them to come back. it will elongate the process, but we're going to get it figured out in the not too distance future and the next bid from comcast may be the all-in bid if you get it. sort of this is as good as it can be they might not say best an